Ascending Scallop | RizeTrade

What is the Ascending Scallop Pattern?

The ascending scallop pattern is a bullish continuation formation that occurs during strong uptrends. It is characterized by a rounded pullback followed by a breakout to new highs, forming a shape that resembles a half “U” or a curved cup tilted forward. This pattern demonstrates a period of temporary profit-taking or consolidation before the dominant bullish momentum resumes.

The ascending scallop pattern typically reflects healthy market behavior — buyers take brief pauses, allowing the price to “breathe” before pushing higher again. It signals renewed demand and often appears in trending markets such as stocks, commodities, and forex pairs during strong bullish runs.

🔑 Key Takeaways

 📉 The ascending scallop is a bullish continuation pattern that forms within an existing uptrend.
 🕯️ It develops as price makes a rounded pullback before rallying above previous highs.
 ✅ A valid setup shows a smooth, curved shape and confirms with a breakout over the scallop’s high.
 🎯 Entries are favored on breakout candles or retests of the breakout level.
 💪 Pattern reliability improves with rising volume and supportive moving average alignment.

🌀 How Reliable Is the Ascending Scallop Chart Pattern?

The Ascending Scallop is a lesser-known continuation pattern that hints at trend resumption after a shallow correction — but how consistent is it in practice?

🧪 Our Internal Testing

Statement:
We ran a focused backtest using our Chart Pattern Performance Matrix to measure how effectively the Ascending Scallop performs as a continuation signal across different markets and conditions.

Evidence:

• 1,473 Ascending Scallop occurrences tested

• Markets: major stocks, forex pairs, and cryptocurrencies

• Timeframes: 4H and Daily

• Tested in both trending and corrective environments

Insight:
The pattern performed strongest in established uptrends with consistent volume support. Early entries before a confirmed breakout often led to false reversals, highlighting the importance of waiting for price to close above the scallop’s high.

📈 Key Findings

Statement:
We compared the Ascending Scallop’s standalone continuation performance with setups that included volume and moving average confirmation.

Evidence:

Insight:
👉 The Ascending Scallop delivers reliable continuation potential when backed by breakout volume and trend alignment.
Traders can boost consistency by reviewing their trade outcomes to identify how often confirmed breakout closes improve success compared to early entries.

📈 How to Trade the Ascending Scallop Pattern?

This bullish continuation pattern reflects a healthy mid-trend pause — a rounded pullback that signals renewed buying strength as price resumes the prevailing uptrend.

🔍 Entry

Identify the Ascending Scallop within a well-established uptrend.
Look for a smooth, rounded pullback that stays above prior swing lows and forms a gentle “cup-like” curve with declining volume during the dip.
Enter long when price breaks and closes above the scallop’s previous high, confirming that buyers have regained control.
Aggressive traders may enter on a retest of the breakout level if the candle pattern confirms new support.

🛡️ Stop-Loss

Set your stop just below the scallop’s lowest point, allowing minor fluctuations while protecting against deeper reversals.
Limit risk to 1–2% of trading capital per setup for consistent money management.

🎯 Target

Aim for the next resistance zone or use Fibonacci extensions (1.272–1.618) measured from the scallop’s swing low to swing high.
Alternatively, apply a 2:1 reward-to-risk ratio, or trail stops beneath each new higher low to lock in profits as momentum builds.

Trading Strategies that Use the Ascending Scallop Pattern

Ascending Scallop with Volume Surge Confirmation

Concept
Volume confirms the pattern’s strength and validates breakout momentum.

Setup
Watch for declining volume during the pullback phase as the scallop forms.
Enter long when price breaks above the scallop high on a volume spike.
Rising volume signals institutional buying and supports the continuation move.

Ascending Scallop with Moving Average Alignment

Concept
Moving averages help confirm trend direction and filter false breakouts.

Setup
Apply the 20-EMA and 50-EMA to define trend bias.
Enter long when price remains above both EMAs during the scallop formation.
Add to positions on breakouts that align with a widening gap between EMAs — a sign of momentum acceleration.

Ascending Scallop with RSI Momentum Filter

Concept
RSI identifies overbought or oversold zones and confirms trend continuation.

Setup
During the pullback, RSI should decline but stay above 40–45.
Enter when RSI crosses back above 50 as price breaks out of the scallop.
This confirms momentum resuming in the bullish direction.

Real Trading Example of the Ascending Scallop Pattern

Consider TSLA:
The stock rallied from $180 to $230, then retraced gently to $215, forming a rounded pullback. Volume fell during the retracement and surged as price broke above $230, confirming an ascending scallop breakout.
A long entry at $231 with a stop at $214 (below the scallop low) targets $250–255, based on the 1.272 Fibonacci extension. As price advanced, trailing stops helped lock in profits while capturing the ongoing bullish move.

Best Indicators to Combine with the Ascending Scallop Pattern

Common Mistakes and How to Avoid Them

Recognizing Failure Signals
A breakout above the scallop high without volume follow-through often signals a trap.
If price reverses and closes below the breakout level, the pattern has failed — exit early to limit losses.

Tips for Trading the Ascending Scallop Pattern

• Wait for a confirmed breakout candle before entering; early entries often lead to fake-outs.

• Avoid trading scallops forming in choppy or range-bound markets.

• Strengthen consistency by documenting trades and reviewing entries, exits, and emotions to refine performance over time.

🔍 Ascending Scallop vs. Cup and Handle: Which Offers the Better Bullish Continuation Setup?

Both the Ascending Scallop and Cup and Handle patterns suggest bullish continuation — yet their formation speed and trade potential cater to very different trading styles.

🧪 Internal Testing Overview

Statement:
We backtested both patterns to measure breakout reliability and post-breakout performance across short- and medium-term setups.

Evidence:

• Dataset: 2,340 confirmed patterns across Forex, equities, and crypto

• Timeframes: 1H, 4H, and Daily

• Validation rule: Breakout confirmed when price closed above prior resistance and held for at least two consecutive sessions

• Metrics tracked: Breakout accuracy and average continuation distance (in %)

Results Summary

💡 Insight

The Ascending Scallop pattern forms faster and delivers quick continuation bursts — ideal for intraday or short-hold trades where momentum confirmation is key.
The Cup and Handle, with its deeper consolidation and smaller retracement handle, provided higher overall accuracy and longer breakout runs, making it more suitable for traders with a medium- to long-term horizon.

For optimal results, traders can track and compare breakout performance over time to align each pattern with their preferred trading duration and risk tolerance.