Triangle patterns occur during a range and for the most part a continuation pattern.
There are three types of triangles **** found on a chart:
Ascending Triangles - Typically break to the upside
Descending Triangles - Typically break to the downside
Symmetrical Triangles - A continuation pattern that can break to either up or downside.
Like other patterns, triangles can be seen almost everywhere on a chart.
Triangle patterns occur during a range and for the most part a continuation pattern.
There are three types of triangles **** found on a chart:
Ascending Triangles - Typically break to the upside
Descending Triangles - Typically break to the downside
Symmetrical Triangles - A continuation pattern that can break to either up or downside.
Like other patterns, triangles can be seen almost everywhere on a chart.
Knowing how to identify the structure of a textbook triangle will tell you if it's valid or not.
Triangles can appear similar to wedge patterns and pennants, so make sure you are identifying the correct pattern.
As always you never want to trade this pattern alone, use additional confluence factors such as; volume and Fibonacci levels.
Key Points of the Lesson
UTILITY
3 types of triangles:
Ascending
Descending
Symmetrical
Generally, triangles are continuation patterns.
Used for generating possible price targets based on the height of the triangle.
IMPLEMENTATION
There have to be several touches on the top and bottom edges. ⇒ Important to have no “white space”.
Volume should decline up to the apex ⇒ increase on breakout/breakdown.
Price target ⇒ extend the height of the triangle from the breakout/breakdown point.
Possibilities to trade a triangle:
(Aggressive) entry within the triangle ⇒ higher risk and reward.
At the break of the trendline with increasing volume (entry with market order).
At the backtest of the trendline break.
DESCENDING TRIANGLE PRACTICAL EXAMPLE
ASCENDING TRIANGLE PRACTICAL EXAMPLE
TIPS & TRICKS
Volume is very important on the breakout/breakdown.
Low volume breakout/breakdown ⇒ possible fake out!
Generally, we can expect continuation of the previous trend before entering the triangle.
Can be used in Elliot Wave theory:
Triangles are labelled with ABCDE touches.
Use Fibonacci retracement and target 0.618 rejections/bounces on the edge.
SYMMETRICAL TRIANGLE THEORETICAL EXAMPLE
TAKE HOME MESSAGE
Triangles are generally continuation patterns.
Target the height of the triangle from the breakout.
Volume is important in the triangle and upon breaking out/ breaking down.