Ascending triangles are bullish biased patterns that are characterized by a series of at least two higher lows along with a series of at least two highs that top out or find resistance at around the same price. The higher lows can be connected with an uptrend line, while the highs can be connected with horizontal or near horizontal line that forms the resistance area. Keep in mind that ascending triangles MUST have at least two minor highs forming the top trendline and at least two minor lows forming the bottom trendline to be valid. Many people incorrectly identify ascending triangles, for instance consider a pattern that has 3 higher lows but only has 1 high. This is not an ascending triangle even though it might look exactly like one.
The volume tends to decrease during the formation of the pattern. A generic price target can be calculated by measuring the height of the triangle and adding it to the horizontal resistance line that forms the top of the pattern.
All the statistical information for the chart patterns is referenced form the book: Encyclopedia of Chart Patterns by Thomas N. Bulkowski – Publisher: John Wiley & Sons. Click the title to buy this excellent book.
Statistics: based on a population of 725 examples in 500 stocks from 1991 – 1996.