In contrast to the symmetrical triangles, those of the ascending and descending types are characterized by the two levels – i.e., horizontal and slanted (the second one is either ascending or descending).

It should be emphasized that both the levels in the symmetrical triangle are slanted.

There is an example of the symmetrical triangle.

The difference between the ascending- and descending triangles consists in the horizontal line location. That is, the ascending triangle is characterized by the upper horizontal line (the resistance) and the upward-turned slanted level. At the same time, the descending triangle is characterized by the lower horizontal line (the support) and the downward-turned slanted level

Below one can see the corresponding examples from a book by E. Neiman.

a). As regards the ascending triangle, the horizontal line of resistance is located above and the slanted level is turned upward.

b). The descending triangle is characterized by the horizontal line of support located below and the downward-turned slanted level.

Examples of the symmetrical, ascending and descending triangles, submitted by A. Elder.

 

J. Murphy about the ascending and descending triangles has written the following.

Essentially differing from the symmetrical pattern, both the ascending and descending triangles rather clearly predict the situation at the market. Besides, the prognostication reliability does not depend on the stage in the tendency development, where such triangles are formed. The ascending triangle is considered the bull pattern, whereas the descending triangle is considered the bear pattern. In contrast to them, the symmetrical triangle is a neutral pattern.

 

Chart 6.3a. The ascending triangle comes to an end when the price of closing substantially goes out of the trend upper line. This breaking through must be accompanied by a steep increase in the trading volume. The upper line of resistance turns into the level of support in the course of the further falls in prices. The minimal price target is determined by measuring the triangle height (AB). Further this segment is projected upwards to start from the point of breakdown (C).  

Chart 6.3b. The ascending triangle represents the phase of consolidation under the condition of the rise in prices in August. The reader should pay attention to the horizontal location of the upper line and the ascending lower one. In addition, in June the pennon is descending. It is also important to pay attention to the number of flags, ascending during the steady (stable) regular fall in prices in the period from February till May

As well as other classicists of Forex, Murphy regards the trading volume as the criterion of the true breaking through triangles of all types.

 When prices of closing steeply break through the trend upper line, it is the bull breakdown. As in the cases of all other essential breakdowns directed upwards, the trading volume must substantially increase. The return to the line of support (the horizontal upper line) happens not infrequently. It is accompanied by an inessential trading volume.

Technique of measurements

 The method of measuring the ascending triangle is rather simple. The pattern height must be measured in the widest part. Further this length is to be projected upwards – to start from the point of breakdown. It is one another example of using the price model volatility (changeability) for determining the minimal price orienteer.

Chart 6.3c. Price consolidation in the contracts, made from April till the end of June (GBP). It is a perfect illustration of the ascending triangle. Usually it’s the bull model. The attention should be paid to the fact that here the trend ascending line arises from the very bottom of the market. The horizontal line above is the “neck” line of the reversal basic pattern – the “head and shoulders”, formed at the market bottom. A channel clearly restricts the price dynamics in the period from November till February.

The descending triangle is the mirror copy of the ascending triangle. As a rule, it is considered bear model.

  1. Elder’s viewpoint on the ascending and descending triangles.

 The ascending triangle is characterized by the increasing lower bound. It indicates that one should expect the upward-directed breakdown. The descending triangle is characterized by the decreasing upper bound. It indicates that the fall in prices is most probable. The symmetrical triangle indicates that strengths of the “bulls” and “bears” are equal. Most probably, the trend will continue.

True breakdowns usually occur within the first 2/3 of the triangle length. Sometimes after the breakdown prices return to the triangle again. Such recoils provide perfect points for starting the gamble towards the breakdown direction.

The descending triangle has a relatively smooth lower bound. Its upper bound is going downwards. The smooth lower bound indicates that “bears” preserve their strength. They pull the prices down to the previous level. In their turn, “bulls” lose their strength. They cannot raise prices as high as before. Most probably, the descending triangle will end with the descending breakdown.

The trading volume tends towards diminishing as the triangle is aging. If the trading volume increases when prices are elevating, the upward-directed breakdown is most probable. If the trading volume increases when prices approach the minimum, the down-directed breakdown is most probable. The true breakdown is accompanied by a splash (burst) in the trading volume – at least by 50% of the average value during the last 5 days.

True breakdowns usually occur within the first 2/3 of the triangle length. It is better not to gamble on breaking through the last 1/3 of the triangle length. Prices can stagnate in the whole path up to the point of intersection. In this case, most probably, prices will remain constant. The triangle reminds a combat between 2 tired boxers, who start to lean on one another. The early breakdown indicates that one of the fighters is stronger. If prices remain within the triangle till to the end, both fighters are exhausted. Formation of a new trend is unlikely.

Calculating targets of breaking through the triangle. Making use of the triangle, one can calculate the price minimal level for the further movement in prices. The triangle height must be measured to start from the bottom. Further this distance must be transferred to the vertical – to start from the point of breaking through the triangle. If one deals with a small triangle in the middle of the heavy trend, most probably, this minimal estimation will be surpassed.

Luca’s concept of ascending and descending triangles

The ascending triangle is the tendency continuation pattern when the tendency is restricted with the horizontal line of resistance and the ascending line of support.

The ascending triangles can be of the bull- and bear types. In Chart 3.13, one can see the ascending bull triangle under the condition of the ascending tendency. That is, notwithstanding the consolidation, the demand still exceeds the supply. The upward-directed breakdown under the condition of a large trading volume confirms that the pattern is true. The price orienteer is equal to the triangle bottom width, transferred to start from the breakdown point. Approaching the triangle apex, the trading volume is steadily diminishing. However, it rapidly increases after the breakdown.

In Chart 3.13, the line of resistance AB is horizontal. The line of support CB that intersects AB is directed upwards. The price orienteer D is equal to the triangle bottom width AC, transferred upwards to start from the point of breaking through the line of resistance.

According to the numerical data, the ascending triangle bottom width is equal to 105.00 – 103.00 = 200 pips. The price orienteer is located on the level 107.00 – i.e., by 200 pips higher than the breakdown point 105.00 (see Chart 3.13 on the right).  

 

Chart 3.13. A typical ascending triangle of the bull type.

Chart 3.15. A typical ascending triangle of the bear type continuous the descending tendency. That is, notwithstanding the consolidation, the demand remains lower than the supply. The bear ascending triangle is confirmed when the downward-directed breakdown occurs on the background of the large trading volume. The price orienteer is equal to the triangle bottom width, transferred to start from the breakdown point.  

In Chart 3.15, the horizontal line of resistance is determined by A- and B points. It is intersected by the line support CB, directed upwards. The price orienteer is equal to the triangle bottom width AC, transferred downwards to start from the point of breaking through the line of support.

According to the numerical data, the ascending triangle bottom width is equal to 105.00 – 102.00 = 300 pips. The price orienteer is located on the level 101.00 – i.e., by 300 pips lower than the breakdown point 104.00 (see Chart 3.15 on the right).

The descending triangle is the mirror image of the ascending triangle.

E. Neiman’s approach to points of opening deals in descending and ascending triangles

The intensive signal is the coincidence between the trend and triangle – e.g., the bear trend and the descending triangle (in terms of C. Luca, it is the bear descending triangle).

The intensive signal (+++) is a good position for opening deals directed downwards.

The weak signal is convergence between the trend and triangle (opening of deals against the trend direction). For instance, in terms of C. Luca, the bull trend and descending triangle make the bull descending triangle.

The weak signal (+) must be confirmed by two additional signals. It’s an favorable (weak) position for opening deals.

The intermediate (moderate) signal (++) depicts the lack of coincidence between the trend and triangle (opening of deals along the trend direction).

The intermediate signal (++) is the confirmation on the level of A- line. It is the medium (average, middling) position for opening upward-directed deals.

The questions asked by Masterforex-V Trading Academy

1.  Why does the trend coincidence with the triangle (the bear descending triangle) is really an intensive signal of opening deals along the trend – in contrast to the case of the symmetrical triangle?

2. When the triangle is broken through, all classicists of the technical analysis of Forex determine the target of the currency pair movement as 200%. Do other targets exist?

One can find a prompt in A. Elder’s Chart.

·  In the case of the ascending triangle, the breakdown (on the left in the chart bottom), the target placed above substantially exceeds 200%.

·  In the case of the descending triangle, the breakdown (in the center of the chart), the target located beneath is substantially lower than 200%.

Dealing with breaking through the triangle, does one know another technique of measuring the movement targets? Such method must be more precise than the ones developed by the classicists of Forex – even with taking into account analytical expressions, developed by the classicists?

3. Does the chart by A. Elder confirm E. Neiman’s statement concerning the weak signal?

Here one can see

- the upward-directed breaking through the ascending triangle, the previous trend being descending?

- the downward-directed breaking through the descending triangle, the previous trend being ascending?

What signal is really intensive under the conditions of breaking through the ascending and descending triangles?

You can discuss the chapter with the Academy members by following the link

Chapter 1. Trend definition in the Masterforex-V Trading System >>
Chapter 2. Levels of resistance and support in Masterforex-V Trading System >>
Chapter 3. Actual and false breakout of the resistance and support level. Rebound from technical level.>>
Chapter 4. Technical levels of Forex by Dow Jones agency. >>
Chapter 5. Pivot point of currency pairs >>
Chapter 6. Slanted Channels, as a tool of the Forex market analysis >>
Chapter 7. Opening of positions when using Slanted Channels >>
Chapter 8. Slanted channels in the Masterforex-V trading system >>
Chapter 9. Classic figures of technical analysis - Trend Reversal  >>
Chapter 10. Classic figures of technical analysis - Trend Reversal (ending) >>
Chapter 11. Technical analysis - patterns of continuation of trend - rectangle >>
Chapter 12. Patterns of continuation of trend - Gaps >>
Chapter 13. Patterns of continuation of trend - flag, pennant and wedge >>
Chapter 14. Models of the Forex technical analysis - triangles >>
Chapter 15. Symmetrical triangle - regularities and traps >>

Read more:

Chapter 17. Expanding triangle - unresolved problems of classics of the Forex technical analysis >>
Chapter 18. Trading On News: mistakes and unresolved secrets of classical analysis >>
Chapter 19. Trader's code of good practice by news under the Masterforex-V trading system >>
Chapter 20. Ally pairs: which gauge at forex is the most unbiased (impartial) and precise. >>

Book 1. The secrets of trading art from a professional trader (or what Bill Williams, E. Naiman and others did not tell traders about Forex) >>

Book 3. Points of opening and closing of positions at the Forex market (basic course) >>

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