The ascending triangle chart pattern is one of the common continuation chart patterns in technical analysis. It is identified by two trendlines that connect multiple peaks and troughs on a price chart, creating lines of support and resistance. The top trendline is drawn along the highs and the bottom trendline is drawn along the lows, with the pattern being complete when the two trendlines are converging. This formation signals to traders that the stock, currency pair, or commodity is likely to break out of the pattern in the direction of the prevailing trend prior to the formation of the triangle.

The pattern is also known as a right-angle triangle due to its shape. The ascending triangle pattern is considered to be an indication of a bullish trend, as it typically occurs in an uptrend, and investors often use it to start new long trades. The way to read the ascending triangle formation is to look at the highest high and the lowest low, which are the points that make up the triangle. If the horizontal trendline is climbing upward, it is known as an ascending triangle.

Traders may enter a long trade when the price is moving up on relatively high volume and breaks above the top of the triangle, while they could also place a short trade when the price breaks below the lower trendline. In either case, a stop loss should be placed just outside the opposite side of the triangle from the breakout direction. To determine an appropriate profit target, technical traders can take the height of the triangle, at its thickest point, and then add or subtract that from the breakout point.

Overall, the ascending triangle is a powerful pattern for traders to identify and capitalize on. It shows when the price of a stock, currency pair, or commodity is likely to break out of the range and possibly continue in the prior overall direction. Knowing the potential entry and exit points along with the stop loss placement, enables traders to have a well-defined plan of action if they choose to trade the pattern.