Ascending Triangle, Triple Busts

Exelon, pictured on the right, is a good example of a triple busted ascending triangle.

The triangle is outlined in a thin blue line on the far left of the chart. To the right of A, price closes below the up-sloping trendline, constituting a breakout. Price drifts lower to B before reversing direction.

When price closes above the top of the triangle at C, it busts the triangle for the first time. Price continues to move higher to D, but that move is less than 10% above the blue line. Price reverses and drops to E. Notice that E is below the red line which highlights the bottom of the ascending triangle. The drop from the red line to E is less than 10%. The D to E move busted the triangle for the second time.

Then price stock reverses again and rises to G, closing above the blue line and busting the triangle for the third time. If price continues rising by at least 10% above the blue line, then the busting process would end at three busts. Otherwise, the stock can continue busting the triangle additional times by making tall swings above and below the chart pattern.

For a triple (or more) busted ascending triangle, look for the following:

1. Find a double busted ascending triangle except that price fails to move more than 10% after the second bust (the drop from the red line to E). In this example, C is the first bust, and E is the second.
2. Price reverses direction again and closes below the bottom or above the top of the chart pattern, busting it for a third time.
3. If price fails to move by 10% or more before reversing and closing on the opposite side of the ascending triangle, additional up and down cycles may continue, busting the ascending triangle more than three times.