Qualys, Inc. (QLYS), a cloud-based security company, is building up for a monster move. The stock's price chart has created a price pattern that I'm extremely familiar with – an ascending triangle.

In fact, it's one of my favorite price patterns to find in a stock. With an ascending triangle, I can find key levels and a clear signal on what to expect.

There will always be two key trendlines to any ascending triangle. One will act as a point of resistance (in red) pushing shares back down. The other will act as support (in green) and help keep shares trending higher.

Take a look:

Ascending triangle formation on the chart of Qualys, Inc. (QLYS)
Optuma

When a price pattern has a rising support trendline along with a horizontal resistance point, that tells us it's an ascending triangle.

With any triangle pattern, we can predict the size of the move after a breakout by simply taking the height of the pattern itself. In the case of Qualys, the height is $30 per share – from the $97 point of resistance to the bottom of the support trendline at $67. From the current price level, that equates to a move of more than 30%.

It's important to note that, until we see the stock make a clear breakout, the jump could be in either direction. However, triangle patterns also give us a clue as to which way this breakout will occur.

That's because they tend to be continuation patterns. This simply means that, whatever price direction the stock was heading in prior to the formation of the pattern, the stock typically continues that way.

Qualys shares have surged nearly 400% since 2016, showing that this stock is clearly trending higher. That tells us to expect an upward breakout for the stock.

The Bottom Line

The ascending triangle pattern on the stock chart for Qualys is pointing to a major breakout. We can expect a move of 40% or more in relatively quick fashion. Knowing that triangles are continuations patterns means we can predict that the breakout should be to the upside.