Lesson 8 of 8 · Candles & Chart Patterns
Triangles
Price compresses before a decision.
A triangle forms when highs and lows converge toward an apex. Price makes smaller and smaller swings, squeezing the range. When the compression breaks, the move tends to be sharp because the tightening builds pressure.
Three types, different bias.
A symmetrical triangle has both sides converging equally. An ascending triangle has a flat top and rising lows, which typically resolves upward. A descending triangle has a flat bottom and falling highs, which typically breaks down. All three end in a breakout, but direction depends on the type.
Ascending triangle: flat top, rising lows.
FLAT TOP shows the resistance buyers keep testing. RISING LOWS shows sellers defending lower each time. The pattern says buyers are more committed than sellers. Volume typically shrinks during the squeeze and expands on the break.
Price is squeezing near the apex. Which way does it break?
Reveal what happened
It went up. Price broke upward from the ascending triangle, which is the more common resolution for this pattern type. Breakdowns happen too, and a break that quickly reverses is a false breakout. Volume on the break is the key confirmation.
A stock forms an ascending triangle over three weeks: flat resistance above, rising lows below. What does the textbook expect?
Show the answer
A. An upside breakout. An ascending triangle shows buyers pushing higher each time while sellers hold the same ceiling. The rising lows show who has more momentum, and the usual resolution is upward.