Ascending triangle is formed when resistance level and higher lows come together. When this happens, at some level the buying investors will certainly not be able to surpass. Therefore, they progressively push the price up, as an example with higher lows.
In cases when the buyers gain strength by making higher lows, they still keep pressing the resistance level, as a result of which break outs happen.
After the breakthrough, the investors face the question as to what direction the market will continue its move. In some cases the buyers can break through that level as well, if the resistance is not strong enough.
Many Forex chart analysis will witness that in such a situation the buyers have a good potential to win, while the price is so strong that it can overcome the previous resistance level. However, resistance in some cases can prove to be stronger and the buying power will not surpass it.
In ascending triangle, it is most possible that the price will continue growing and gaining power; however, it is important not to concentrate on the price movement direction mainly but be ready to that the market can move to any direction.
An ascending triangle is formed when one trendeline is drawn horizontally, while the second trendline connects numbers of increasing highs. It is typical of trader to enter into long positions, if they observe the price to break through the resistance level.
The ascending triangle is interpreted the following way, the investors will start buying once they see that the trendline has broken through the resistance line and is on its half way or more to the newly formed resistance level.
In the ascending triangle pattern formation it is assumed that the price formation will generally reach its target level which is calculated the following way:
R + H=T
I this formula:
R – resistance is the horizontal line
H – height of the pattern which is the distance between support and resistance lines
T – target price; which is formed as a sum of the former two units