Descending & Ascending Triangle Pattern
Trading Strategy Guide

The triangle price pattern is a type of continuation price pattern, where price get compressed and converge over time.

In this triangle chart pattern guide, you will learn:

How to trade the 3 different types of triangle patterns – symmetrical triangle, ascending triangle, descending triangle
Specific trading strategies to profit from the triangle price pattern
Practical tips from the trading desk for live trading

If you like this guide, click here to check out our whole series of free trading guides!

Content Page

beginners guide to trading technical analysis

CHAPTER 1 Introduction to Price Chart Patterns

CHAPTER 2 What is a Triangle Price Pattern?

CHAPTER 3 Triangle Chart Pattern Psychology

CHAPTER 4 The 3 Types of Triangle Patterns

CHAPTER 5 Triangle Pattern Trading Strategies

CHAPTER 5a

Strategy #1 Breakout Entry

CHAPTER 5b

Strategy #2 Pullback Entry

CHAPTER 6 Which Triangle Pattern to Avoid

CHAPTER 7 Profit Target for Triangle Pattern

CHAPTER 8 Tips from the Trading Desktop

CHAPTER 9 Video Tutorial on Triangle Patterns

Looking for a particular topic? price patterns triangle pattern ascending triangle descending triangle symmetrical triangle triangle pattern psychology triangle pattern trading strategies triangle pattern profit target triangle pattern video tutorial

Chapter 1:
Introduction to Price Chart Patterns

Before diving into triangle patterns, we recommend you to first read “The Definitive Guide to Trading Price Chart Patterns” to get the big picture and learn about the different types of price chart patterns.

Once you are done with that, you can return to this guide, which will focus on the triangle pattern in greater detail.

Click here to start reading on price chart patterns

definitive guide to trading price chart patterns

definitive guide to trading price chart patterns content page

Chapter 2:
What is a Triangle Price Pattern?

After having seen all the different price patterns, in this chapter we will zoom in on the triangle chart pattern, which is one of the consolidation price patterns.

We will learn how the pattern forms, and how to identify it.

We also briefly introduce the different types of triangle pattern formations, such as the symmetrical triangle, the ascending triangle, and the descending triangle.

What are Triangle Price Patterns?

A triangle pattern, as its name suggests, is a triangular consolidation range in which prices moves about.

The triangle pattern generally represents a medium-term consolidation of prices, and is usually found in the mid/late stages of a trend.

Since it is a medium-term pattern, the triangle pattern usually consists of 50-100 bars, and most of the time results in prices breaking out in either direction as prices get compressed.

As prices get squeezed towards the tip of the triangle, prices will be forced to break out of the pattern, and the direction is takes will depend on the type of triangle.

There are 3 main varieties of triangles – namely the ascending triangle, the descending triangle, and the symmetrical triangle, and we will be going through each one in more detail later on.

Chapter 3:
Triangle Chart Pattern Psychology

This chapter will look at the underlying reasons why triangle patterns form, and how the actions of different market players give rise to such patterns.

Buying and selling forces are always fighting to gain control, and depending on which side is stronger, it gives rise to different types of triangle patterns.

Now, let’s take a look under the hood!

Triangle Pattern Psychology

In the triangle pattern, bulls (buyers) & bears (sellers) are fighting and both sides are trying to gain control. Bulls want higher highs and higher lows, while bears want lower highs and lower lows.

As the fight intensifies, uncertainty increases and volume decreases, as the range of prices start narrowing, so both bulls and bears choose to wait on the sidelines until the direction becomes clear before jumping in again.

That is why once a breakout occurs, price and volume tends to spike, as all the buyers or sellers waiting on the sidelines start making their move.

Chapter 4:
The 3 Types of Triangle Patterns

In this chapter, we explore the 3 different types of triangle patterns – the symmetrical triangle, the ascending triangle, and the descending triangle.

We will dive deeper into each pattern to understand how they come about, and then explain the best way to trade each of them.

Knowing the intricacies of each pattern will be essential when we move on to the next chapter on trading strategies.

How to Tackle Each Type of Triangle Pattern

As we have seen, all triangles consist of 2 sloping lines which converge, but the main difference lies in the gradient for each pairs of lines.

Symmetrical triangle – both lines are sloping inwards (top line slopes down and bottom line slopes up)
Ascending triangle – top line is flat, while bottom lines slopes up
Descending triangle – bottom line is flat, while top line slopes down

The slope of these lines have a great significance, which I will cover in greater detail by going through each triangle pattern.

Symmetrical Triangle Price Pattern

The symmetrical triangle with its converging lines show that both sides (buyers and sellers) are equally matched, which makes it hard to predict which side the breakout is going to happen.

Since it is a continuation pattern, the odds will tend to favour direction of the existing trend, but it is still much harder to trade compared to the next 2 triangle patterns.

Ascending Triangle Price Pattern

The ascending triangle, with its bottom line sloping up, shows a bullish bias, as this indicates a series of higher lows.

Recap: A series of higher lows and higher highs is an uptrend.

The flat line on top, which now serves as resistance, becomes a clear level for price to attack and break, and if it succeeds, will lead to higher highs.

Hence, there is a higher probability of an upside breakout for the ascending triangle, especially if it forms in the middle of an existing long-term uptrend.

Descending Triangle Price Pattern

The descending triangle, with its top line sloping down, shows a bearish bias, as this indicates a series of lower highs.

Recap: A series of lower highs and lower lows is a downtrend.

The flat line at the bottom, which now serves as support, becomes a clear level for price to attack and break, and if it succeeds, will lead to lower lows.

Hence, there is a higher probability of a downside breakout for the descending triangle, especially if it forms in the middle of an existing long-term downtrend.

Chapter 5:
Triangle Pattern Trading Strategies

In this chapter, we will discuss the best ways to trade the triangle chart pattern, and how to profit from this pattern.

There are 2 main strategies we will be using:

Breakout strategy
Pullback strategy

Each has its pros and cons for practical trading.

Triangle Pattern Trading Strategies

There are 2 main strategies, which focus on the directional triangles (ascending triangle and descending triangle), and the difference lies in how early to enter the breakout when it happens.

Breakout Entry: Enter immediately
Pullback Entry: Wait for a pullback after the breakout

Something to take note of, breakouts usually occur when prices are around 2/3 to 3/4 of the pattern length, and if prices go past the 3/4 mark, there is a possibility that prices may just continue to meander sideways without breaking out. This would mean a failed pattern.

Now, let’s go through each strategy in greater detail.

Chapter 5a:
Strategy #1 Breakout Entry

The first trading strategy for the triangle pattern is the breakout entry, which allows us to enter the trade immediately once the pattern is completed and the breakout occurs.

This works best on the ascending triangle (long entry) and descending triangle (short entry).

Triangle Pattern Trading Strategy #1

Our first strategy for the triangle price pattern is to enter on the breakout of an ascending triangle or descending triangle pattern.

As mentioned previously, a triangle is a compression of prices while buyers and sellers wait on the sidelines for a breakout. For this setup, we will be looking to enter just as the breakout happens.

In the example above, we see a prior uptrend, so we know the odds for an upside breakout are higher.

As the ascending triangle forms, we see a series of higher lows (and similar highs) forming, showing a gradual build-up of bullish pressure. We also see prices pushing against the resistance level formed by the similar highs.

Finally, the resistance gives way, and prices through.

For trading, we would look to enter near the point of breakout, keeping an eye for strong price action and volume to support the breakout. We can also use the breakout bar(s) to place a stoploss.

Note that this strategy works just as well with a descending triangle, you’ll just have to flip the pattern around for a downside breakout.

This strategy works best if the prior trend (before forming the triangle pattern) is strong, and has a higher chance of success if the triangle is smaller, in terms of height and duration.

Chapter 5b:
Strategy #2 Pullback Entry

The second trading strategy for the triangle pattern is the pullback entry, which allows us to enter on pullbacks after a breakout occurs. This is useful if the initial breakout is weak, or if you missed the breakout trade.

This works best on the ascending triangle (long entry) and descending triangle (short entry).

Triangle Pattern Trading Strategy #2

Our next strategy for the triangle price pattern is to enter on a pullback after the initial breakout.

As covered in the previous setup, one of the ways to trade an ascending triangle or descending triangle is to enter the moment price breaks out of pattern.

However, sometimes the odds of a successful breakout might be lower, for example if the triangle pattern is large (more uncertainty), or the pattern goes against the prior trend (bullish ascending triangle in a downtrend, or bearish descending triangle in an uptrend).

In the example above, we see a prior uptrend, followed by a bearish descending triangle. This sets up up a little contradiction, which suggests that the breakout might not be as strong or as clear-cut.

Therefore, when the breakout happens, instead of entering the trade immediately, we wait to see if there is a pullback to test the support-turned-resistance level (which was the flat line of the descending triangle).

For trading, we would look to enter once the pullback is completed, and prices start to head back down. The end of the pullback would also be a good place to put your stoploss.

Note that this strategy works just as well with an ascending triangle, you’ll just have to flip the pattern around for an upside breakout.

Chapter 6:
Which Triangle Pattern to Avoid

For both trading strategies, we mentioned that they work better for the ascending triangle and descending triangle, but we left out the symmetrical triangle.

Why do we dislike this pattern, and what makes it harder (and less reliable) to trade?

In this chapter, we will be focusing on the symmetrical triangle.

Which Triangle Pattern to Avoid?

You might have noticed that I left out the symmetrical triangle in both the strategies mentioned earlier.

The reason is that I find the symmetrical triangle the least reliable pattern of the 3 triangle patterns.

This is because it is hard to confirm a successful breakout of this pattern, and even harder to determine a good entry point.

In the example above, prices have broken out to the upside of the symmetrical triangle pattern.

However, because of the nature of the pattern, there will still be another high (or low, if it broke to the downside) which prices have to surpass, and it becomes a resistance level.

As a result, even after the breakout, we are not sure if prices have starting trending, or whether prices are still within a wider range.

We can only be sure after prices have broken the new resistance level and continues climbing, in which case the original symmetrical triangle breakout did not really have much significance or trading opportunity.

Hence, I would prefer to focus on those patterns which have a more predictable outcome.

Chapter 7:
Profit Target for Triangle Pattern

One major benefit of using price patterns is that they provide a measuring objective (price projection), which is useful for getting an estimated price target for your trades.

In this chapter, we will show you how to project a price target using the triangle price pattern.

How to Do a Price Projection for the Triangle Pattern

Once a triangle pattern is completed, one of the most useful things about it is its ability to provide a price projection, which can be used to estimate a minimum profit target for your trade.

This can be done by taking the maximum height of the triangle, and projecting that distance from the breakout point.

In the chart above, the maximum height of the triangle is indicated by the blue rectangular box, which is then used as a price projection at the breakout point.

The black horizontal arrow indicates the price level which serves as the minimum profit target for the triangle pattern breakout.

This price projection technique can be used in conjunction with other methods, such as support and resistance levels, and if there is any confluence, gives an added layer of confirmation.

Chapter 8:
Tips from the Trading Desk

When it comes to actual trading, the context is usually more important than the price pattern itself, and the more factors you can align in your favour, the higher your chances of success in using the triangle pattern to trade.

In this chapter, we will share practical trading tips that you can to enhance the success rate of the triangle chart pattern.

Tips from the Trading Desk

Trade with the larger trend, as breakouts are more likely to happen in the same direction as the prior trend
Watch out for triangles that are themselves a part of a larger price pattern
Look out for major support and resistance levels

As you can see from the chart above, this is an example of trend trading using the triangle pattern, because the triangle formed is actually a consolidation pattern within the major trend, so this whole triangle is actually a pullback opportunity to enter the underlying trend.

Although we generally do not like trading symmetrical triangles, the odds in this case are better than 50-50 because there us a higher chance of an upside breakout due to the context (triangle pattern pullback in major uptrend).

Besides strong trends, triangle patterns can also form near the edges of support or resistance levels, when prices are trying to push through that price level, so you might see them near the necklines of other patterns, such as the double top/bottom, or head and shoulders pattern.

In a sense, the triangle pattern becomes part of these larger patterns depending on the context.

Chapter 9:
Video Tutorial on Triangle Patterns

For a more detailed explanation on triangle patterns, here’s a video tutorial on “How to Tackle the ‘Big 3’ Triangle Chart Patterns”, including the symmetrical triangle, the ascending triangle, and the descending triangle.

It also provides a good summary of everything that we have covered in this guide.

How to Tackle the “Big 3” Triangle Chart Patterns

Conclusion

I hope you have enjoyed this guide on how to tackle triangle chart patterns.

Now I’ll like to hear from you: what is your key take-away from this trading guide?

What is your favourite triangle pattern strategy for trading?

What are some of the challenges in trading the triangle chart pattern?

Do you have any triangle pattern trading strategies of your own to share?

Let me know by leaving a quick comment below right now.

If you like this guide, click here to check out our whole series of free trading guides!

12 replies

Johnnie says:
January 11, 2021 at 8:46 pm

Do you think that these patterns are more accurate on a short term or long term charts?
Reply
- Spencer Li says:
  January 18, 2021 at 3:46 am
  
  Actually, they work for all timeframes, including long-term and short-term. On the shorter-term, you will see them appear more frequently, so you filter them out to pick the best ones. On the other hand, om the longer-term, there will be less noise and less chance of a false pattern.
  Reply
  - Johnnie says:
    January 21, 2021 at 4:59 pm
    
    Thanks for the reply!
    Reply
    - Spencer Li says:
      January 25, 2021 at 12:24 pm
      
      You’re welcome, love to help!
      Reply
Roland Chng says:
February 1, 2021 at 7:58 pm

“This price projection technique can be used in conjunction with other methods, such as support and resistance levels, and if there is any confluence, gives an added layer of confirmation”, I also understand there are other recommendations that the risk to reward ratio is 1:3, is it advisable?
Reply
- Spencer Li says:
  February 4, 2021 at 2:11 am
  
  The price projection actually has nothing to do with the reward to risk ratio (RRR). The price projection gives you a potential target price based on the pattern, whereas the RRR is the ratio of your potential gain (difference between target and entry price) to the potential loss (difference between entry price and stoploss).
  Reply
  - Roland Chng says:
    February 14, 2021 at 7:56 pm
    
    Thanks for getting back. So what are methods do you use personally?
    Reply
Louie Parker says:
February 15, 2021 at 9:38 pm

Thanks for sharing this info! Appreciated!
Reply
Ranjit says:
February 16, 2021 at 4:35 pm

Hello. I usually use the breakout and pullback method myself.
Reply
Kee Hui Da says:
February 17, 2021 at 12:45 pm

I like to see breakouts. The signs are more obvious and easier to analyze.
Reply
Cindy Toh says:
February 18, 2021 at 11:59 pm

Just starting out here! Learning these cute little patterns 😀
Reply
Tony says:
February 19, 2021 at 11:40 pm

How do you identify false breakouts or pullbacks?
Reply