• Category: Strategies

# Binary Options Trading: Busted Ascending And Descending Triangles

In chart analysis, triangle patterns are exactly what they claim to be—patterns that form a triangular shape. This happens when two trend lines converge (these can be ascending, descending or flat trend lines) and the price of the asset moves between the two converging trend lines.

## Binary Options Trading: Busted Ascending And Descending Triangles

There are three types of triangle patterns—ascending, descending and symmetric. They all look quite similar but they appear differently on the charts. Here, you will learn about the ascending and descending chart pattern and ways to use them as part of your binary options trading strategy.

### What are the ascending and descending triangles?

The ascending triangle is a bullish continuation candlestick pattern. It typically forms in an uptrend and is an indication of accumulation. On the other hand, a descending triangle is a bearish chart pattern that forms in a downtrend. It is also a continuation pattern but it indicates a distribution.

Both formations are a sign that an asset is increasing in demand ( ascending triangle pattern) or decreasing( descending pattern) in demand. The patterns form when the asset encounters the horizontal trend line, which is also the level of support or resistance, before rallying and continuing in the direction of the impending uptrend or downtrend.

### How to identify the ascending and descending triangle pattern

Both the ascending and descending triangle patterns are commonly referred to as right angle triangles due to the shape they take.

The ascending pattern forms when two or more equal high price points form a horizontal trend line at the top. Then two or more rising channels come together to create an ascending trend line that meets the horizontal line as it’s on the rise. This pattern is characterized by several elements:

First, to be identified as a continuation pattern, the ascending triangle must form in an existing trend.

Second, there must a top horizontal trend line. For this line to form there must be two or more highs that are relatively equal. A reasonable distance should exist between the highs and the low price between the two highs.

Third, there must be a lower ascending trend line to form the two reaction lows. There should be a distance between the two lows and they must continue to be higher as the trading day progresses.

Fourth, the pattern should last at least 1 to 3 months. When a price breakout on the upside takes place, the volume of trading should increase, just to confirm the breakout.

Fifth, there must be a return to the breakout. The horizontal line turns into support if the resistance line of the ascending triangle breaks.

Finally, when the breakout takes place, measuring the largest distance of the pattern and adding it to the resistance breakout will help you to determine the price projection.

Many of the characteristics of an ascending triangle are the same for a descending triangle pattern.

First, to be identified as a continuation pattern, the descending triangle must form in an existing trend.

Second, there must a top horizontal trend line. For this line to form there must be two or more lows that are relatively equal. A reasonable distance should exist between the lows and the price between the two lows.

Third, there must be an upper descending trend line formed by two reaction highs. There should be a distance between the two highs and they must continue to be lower as the trading day progresses.

Fourth, the pattern should last at least 1 to 3 months. When a price breakout on the downside takes place, the volume of trading should increase, just to confirm the breakout.

Fifth, there must be a return to the breakout. The horizontal line turns into support if the resistance line of the descending triangle breaks.

Finally, when the breakout takes place, measuring the largest distance of the pattern and subtracting it to the resistance breakout will help you to determine the price projection.

### How to Trade Ascending and Descending Triangles

Short-term investors prefer to trade the ascending and descending triangles. This is because traders can profit from the sharp rise in prices that long-term traders usually await. So, instead of waiting for months or years to make a profit, you can make an equally good profit from a shorter expiration period.

By being able to identify these two formations, you can profit every time there is an upward or downward breakout i.e. you will profit regardless of the market direction.

In summary, to successfully trade these patterns, you need to look out for an ascending or descending pattern that forms over a period of up to four weeks. To determine the best price to set for your assets, take the entry price and the height of the pattern on the upward breakout. You may also take the price and subtract it from the height of the pattern in a downward breakout.

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