Symmetrical Triangle Pattern: What is it & How to Use it for Trading

For example, traders enter when the price goes above the high of the breakout candle and put their stop loss below the support line of the triangle pattern while taking a bullish trade. After a breakout above the upper line of the «Triangle,» the price jumped significantly, confirming the continuation of the uptrend. However, pay attention to the trading volume during the breakout to ensure the strength and reliability of the signal.

Trading With the Symmetrical Triangle Pattern

Triangle patterns come in three varieties – ascending, descending, and symmetrical – although all three types of triangles are interpreted similarly. Ascending triangles tend to be bullish as they indicate the continuation of an upward trend. The aim is to add on any pullbacks to support areas such as Rs 265 or Rs 250. For stop placement, a swing low of Rs 240 is used just before the breakout. This allows the stock room to fluctuate while maintaining our risk parameters. The psychology behind this pattern is that after a substantial downside, investors think the stock is oversold and undervalued, causing a small relief rally as some buyers come in.

1. Forex traders often leverage flags to fine-tune their entry and exit points, closely monitoring breakouts for confirmation and utilizing technical indicators to validate signals.
2. The assumption behind this is that the price moves in similar fashion after the breakout as it did within the pattern itself.
3. Price is expected to retest this stair and continue its trajectory towards downside.
4. However, the buyers still remain in control overall during this consolidation period.
5. A triple bottom pattern forms when a security’s price tests a support level three times, creating three distinct low points at roughly the same price level, before breaking out above resistance.

This price range is eventually considered a potential target price of the bullish move when the price finally breaks above the neckline. Confluences like a proper retest and bullish candlestick patterns are observed for strengthening a long trade setup. In the example above, observe how higher highs are forming since the beginning of the consolidation.

1. The stop losses are set slightly below the support line of the pattern.
2. For example, negative spikes with long lower wicks signal panic selling while positive spikes with long upper wicks show euphoric buying.
3. The psychology behind this pattern is that the initial gap reflects a rush of buying or selling pressure.
4. In the ascending triangle, the price breaks the horizontal line upwards, while in the rising wedge, there is an impulse breakout of the upper line downside.
5. We just looked at how the cup and handle pattern, which is an important component of candlestick analysis works.

The pattern resembles two distinct peaks or troughs connected by a triangular consolidation phase. It resembles a standard triangle with an additional peak or trough on either side. Like Japanese candlestick patterns, Western chart patterns are indicators and forms of support and resistance lines. Western chart patterns are commonly classified as reversal or continuation patterns, but these are rough generalizations that help us organize these patterns in our minds.

Are ascending triangle patterns bullish or bearish?

Partial profits are booked and a trailing stop is used to maximize gains as the uptrend extends. The range of the depth is usually taken as a target range whenever the price breaks out of the pattern and initiates a trade setup. Observe how price retested to the broken support, formed a bearish candlestick pattern and created a short setup. The price range between the neckline and the bottom is known as the depth of the base.

Descending Triangle Pattern: Overview, How To Trade, Set Price Targets and Examples

The bearish rectangle pattern is a trend reversal pattern that signals a potential downward breakout. The bearish rectangle pattern appears as a consolidation period where the price trades sideways between resistance and support levels, creating a rectangular shape on the chart. The falling wedge pattern indicates indecision, as buyers begin absorbing the selling pressure.

A symmetrical triangle is a neutral chart pattern formed by converging trendlines, with both support and resistance sloping towards each other. This pattern suggests a phase of market consolidation, indicating a balance between long and short traders. Traders anticipate a breakout in either direction, leading to a potential continuation of the existing trend or a reversal. The symmetrical triangle serves as a versatile indicator, and traders closely watch for breakouts, often accompanied by increased volume, to make informed decisions about potential market movements.

As the uptrend advances, buyers become indecisive while sellers initiate short positions near the highs. This divergence creates volatility as both bulls and bears fight to assert control. The symmetrical diamond shape reflects the equal battle between the two. Eventually, the bears overpower the bulls and break the price downward. The psychology behind this pattern is that after an uptrend, there is a period of indecision where buyers and sellers are evenly matched. This balance between supply and demand results in the price trading sideways within the rectangle pattern.

Resistance and Support

The only thing you have to check is, at the time of the breakout, the volume of the candle which breaks out from the pattern must be higher than of the previous 2 candles. It is observed that when the volume of the breakout candle is higher than of the previous 2 candles, the probability of the price continuing in its prevailing direction is very high. Taking a trade using a triangle chart pattern is easy compared to other chart patterns. Trading using a triangle chart pattern will enhance your probability to become profitable as it is a very effective pattern. Here’s how you can trade using a triangle chart pattern in 3 easy steps.

However, a breakout too early or too late may be indicative of a weaker pattern and a less robust triangle flag pattern continuation. A bullish breakout above the resistance area signals the completion of an ascending triangle pattern. The expected magnitude of the breakout above the resistance line is equivalent to the price difference between the resistance line and the lowest low at the beginning of the triangle pattern. The price of a stock in an ascending triangle pattern will oscillate between testing the resistance area and setting a series of lows, each one higher in price than the prior low. These lows form an ascending trendline that may be tested repeatedly as the pattern progresses.