Ascending Triangle Chart Pattern Trading Strategy

okay so in this video you'll learn how to trade one of my favorite chat patterns right it's called the ascending triangle pattern so let me explain to you you know what this pattern is all about and you know why I love this pattern so much number one write an ascending triangle is pretty much where you see higher lows into resistance and a descending triangle is the opposite of an ascending triangle it's where you see lower highs into support so visually it looks something like this right an ascending triangle okay this is resistance and you see the price making higher lows into resistance all right you can see higher lows coming into resistance so this is a ascending triangle because you can actually connect the lows over here and it looks something like an ascending triangle and on the other hand right the descending triangle is simply the opposite right you see lower highs coming in lower highs coming into support okay so this is an area of support this portion over here and you can see this lower highs coming into support right so this is what an ascending and descending triangle looks like now the thing to note is that the longer the pattern takes to form the more significant it is right and I'll explain why but first right why why does this pattern work and the reason is simple it's because stop losses gets triggered I'll explain if you look at an ascending triangle right let's redraw this right in ascending triangle okay ask yourself right whenever the price hits resistance will there be trade us look into shot the market you can be sure there is right because you know if you study you know technical textbooks you study in all trading causes the Internet they tell you know when price comes to resistance you should be shot to market and I do agree but only in certain conditions and if conditions like this you see the market testing resistance you know for the time the fourth time right you don't really want to be shot this market anymore why is that two things number one there are a cluster of stop-loss right we'll get accumulated over time just above this area of resistance right over let me change the color let's change this to red right there will be cluster of stop-loss right there will be built up above this resistance over time right there will be stop-loss why because traders are looking to shut this market so when there is enough stop-loss there has been accumulated above resistance there's a good chance that the market will break out and trigger those stop-loss to consume this liquidity okay so that's the first reason the second reason is this yes number two all right the first one is stop-loss number two is that it's a sign of strength right when you see the market making higher lows into resistance what does it tell you it tells you that the bias are in control because if they are not in control they couldn't have possibly gnome it higher loose into resistance right they should make something like you know come in yet sell down come in yet sell down and not know higher lows into resistance that you see over here so number two is what I call it let's call it string right a sign of strength so this two reasons right tells you know why ascending triangle you know pretty much works in the long run right because there are cluster of stop-loss above it and it's a sign of strength when you see this pattern okay so this is why ascending and descending triangle pattern work and it's also a good lesson to you that if you see the market testing resistance you know a number of times within a short period right you don't really want to be short resistance anymore because there's a good chance the market will break up higher okay so that's why this pattern work so now how do you treat ascending and descending triangle that's the question right so for me a very simple general rule is this you look for an ascending triangle in an uptrend and you look for a descending triangle in a downtrend so basically you long ascending triangle in an uptrend and you shop descending triangle in a downtrend so let me share with you with a few examples so this one over here I can you see this can you spot this ascending triangle if you can right let me help you with it it's pretty much a simple securities over here you can see this area of resistance any of this higher lows coming into resistance I mean oh my goodness how did I draw that floating stock all right this is resistor and this is the higher lows coming into resistance so can you imagine the top process of a trader who are you know unaware of reading price action limiting oh look at this right price is that resistance I should be shot that's our ego shot and when would they put your stop loss well the textbooks say sir I put your stop-loss just above this high over here so they put your stop-loss just above this high and then right with enough traders you know shutting the market there is you know a cluster of stop-loss build-up above this area of resistance right and number two right this is a sign of strength where you can see lower highs coming into resistance this tells you that buyers are willing to buy at this higher prices and I'm a tree right the market breaks out higher okay and on top of it right number three you have those momentum traders piling into the trade longing on a breakout so imagine right knee or the flu that is in your favor number one stop-loss getting triggered right this becomes a buy order because if you are short and your stops get here what does the trip what is the order of the trade a gets you out of the tree I mean I may be said tell me some confused but basically what I'm saying is that if you're if you are sure and your stop-loss get hit right your stop-loss is basically a buy order to carry out of the market that's one number two traders want a trick breakout when you see the market breaking above the heist they would also go long so you have these two group of traders going long which actually you know create a huge demand for higher prices right the huge buying pressure that it's likely to push price higher so in this case or you can see that the market did a trade higher okay and no look I don't walk you through right how you know you can go about sending your stop-loss entries and exits so there are a few ways to do it that's really don't know best wave no perfect way but for entries is very simple you can either look to go long on the break of the highs or you can gloat you can look to get long right when the market breaks and close at this level over here so there's really no right or wrong to this as far as stop-loss right I typically recommend looking at the nearest structure load near a swing low which is this one over here and give it some buffer and send it you know with some buffer below it right you can use an indicator like the Average True Range said e-180 are below it right just basically gotta give it some buffer from the lows why do you only give some buffer is because you don't have market no to come down spike you out and then continue trading higher so give it some buffer right give your stop small room too brief to say and on top of it right the reason why you want to put it down there is because if you know how a ascending triangle pattern looks like you look something like this right so the market no bricks and close below this so-called upward trend line chances are this pattern is invalidated and you don't want to stay in this trick any longer okay so this is how you can go about with your entries and your stop-loss now what about your take profit right again there are two ways you can go about it for tick profit the first thing that you can do if you wanna have a fixed target right for this you can actually measure the move from here this high to this low right so let's say for example let's put it as a hundred pips right so what you can do is that you can project this hundred pips right from this breakout level from the breakout level where resistance you go up another hundred pips right and over here will be your take profit level so you basically copy this portion over here that distance that a price has move and you may paste up above here so if this has moved hundred pips and the market has move up another hundred pips from the breakout level all right not a hundred pips then this level over here is basically your take profit level right that's one way you can go about in exiting your winning trade an alternative approach right that you can do if you want to know trail your stops trillion we know you can use a moving average right so for example you can use a 20-period moving average I'm sorry this is the 50 the 20-period moving average this red line over here and you can drill your trade right that's the market trade tires and you only exit if it closes below it so in this instance or I can see that the market has actually closed below the 20 ma over here and you will exit this trade so yeah where you are used 20 or 50 it's there's no right or wrong 20 would keep you in with the short-term trend the 50 will keep you in with the medium term trend so it really depends right on how how long or how short of a trend that you wanna you wanna write okay so this is a one example so here's another example can you spot the ascending triangle pattern alright give you five seconds 1 2 3 4 5 ok this one over here this resistance and then you have higher lows coming into this resistance right higher lows again why does this work right you give yo you skip to this portion of the video you don't know know why this pattern working refer back to the early portion end and check it out so anyway this pattern in this case right you can see that this market pretty much is a losing trade right you can see that this market basically got you into the trade you longer breakout and it pretty much collapsed after which you got stop lock you got stopped out right and I the reason why I share with you reading and losing trades because I want to paint to you the real reality of trading right nothing I share nothing I'd share my YouTube my blog website or anything is hundred-percent it's all dealing with probabilities all right so always always manage your expectations that there will be winners and there will be losers and finally another example I want to share at this time this is the opposite is a descending triangle in a downtrend can you spot it I will give you five seconds one two five okay it's actually here right this is the highs lower highs coming into support okay so again how could you have you know trade at this pattern if you look to place a sell stop order just below the lows right or wait for the market to break and close below this support before you get shot again right stop-loss your no reference from the nearest swing high so which is this give it some buffer somewhere about here right your stop-loss should be somewhere about here because if the market can break and close above this downward trend line chances are this pattern is invalidated and you don't want to stay in the trade any longer now the third question is you know where do you set your target right again I mentioned that there are two ways number one take the distance from this high to this load this is a classical chatting principles so if let's say the distance here is say 500 pips for example just project down five hundred pips from this support and your target will be somewhere here right so in this case you may or may not get filled on your target I think possibly not about a plus eighty percent there before the market reverse higher okay so and the other second approach to to trail your stop-loss as I mentioned is to use a moving average like the twenty and fifty whichever depending on the type of trend that you want to capture so in this case right you would have probably exist rate somewhere here okay so this this pattern right if you you know let your winners run right there will be winners I mean small winners small losses right but there will be a few times right possibly no one in ten traits where you catch a big move in the market just keep trending over a long period of time in this way no this Chapman could really know you lose some really nice risk to reward on your traits okay so this is the ascending and descending triangle pattern for you so let's do a quick recap okay so an ascending triangle is basically higher lows into resistance and the descending triangle is lower highs into support the reason why this pattern work is because there is order flow and the other end of the market structure like like you know say for example ascending triangle there is just traders putting your stops above resistance and if the market hits those stops right the stops will get triggered and on top of it you have you know breakout traders looking to get long this - group of traders would create a huge buying pressure that leads to higher prices right if you don't rate this pattern trade with the trend for better odds right after all the trend is your friend and then we discuss about entries stops and exits right how to you know enter the trade where to put your stop-loss okay let's do a quick recap because I think this one is important for most of you so entries I mentioned and it's quite straightforward you can either you know look too long on the break of the highs or you can read for a close after the market breaks out of resistance for stop-loss so I typically reference from the nearest swing low and give it some buffer set it slightly below it over here because you want to exit your trick when this pattern is invalidated so when is this pattern in validator it's when this upward trend line right gets broken so the pattern is invalidated as four exits I mentioned that you can use a BK user number one write a price projection let's call it P P right price projection or using you know if the Cokely the distance from the highs to the lows right and then project it up project it up from your entry price and this is where you could consider taking your profits right you'll get profit and i'm the other technique i share with you is you can use moving average like the 20 out of 52 trill it using a moving average okay so with that's it if you've enjoyed right this video so far what i recommend you to do right now is to go down to my website trading with Rainer comm I'll put the link below but for those of you who want to know what's the links over here trading with Rainer calm and I'll put it below this video as well and then scroll down right to this portion here and you'll see to trading guys go and download them right because it will complement you've just done today right the ultimate guide to trend-following and the ultimate guide to price action trading right it's completely free so just go and download them right and you pretty much you know get a clearer picture to how I treat the markets for the price section guide you'll learn how to better time your entries and exits right and learn how to read the price section of the market what a market is telling you for the trend following that you'll learn how to write massive trends and market right so you can write no uptrend and downtrend and even you know when the market or the stock market is in a recession so completely free right I'll suggest you go down and download these two training guides you know send it to your email so with that said I wish you good luck and good trading right if you've enjoyed this video please hit the like button right subscribe to this channel as well so you always be updated and any questions for me just let me know below and I'll get back to you so with that said I'll talk to you soon you

Loading