Symmetrical Triangle Chart Patterns Education

You need a minimum of two hits on each trendline to draw the pattern. As long as this criterion is met, it can be defined as a triangle pattern. This goes to show you that anything can happen as long as you stay persistent. He stumbled upon a Forex triangle pattern, and once we realized that it worked in Forex, we came to understand that it worked in every trading market. Notice that the volumes during this breakout are relatively low and stay low over the next few periods. Later on we see a bullish breakout when the trading volumes are increasing.

1. Set a stop-loss order below the pennant’s low for a bullish pennant, or above the high for a bearish pennant.
2. Traders are suggested to trade in the same direction of the market to make significant profits.
3. As the price fluctuates within this pattern, the breakout typically occurs midway through the triangle, signaling a potential trend reversal.
4. As you can see in the above image, the descending triangle pattern is the upside-down image of the ascending triangle pattern.

Ascending triangles tend to be bullish as they indicate the continuation of an upward trend. That’s because they point to the continuation of a downtrend or the reversal of an uptrend. Here, in this article, we are going to explain everything you need to know about the symmetrical triangle chart pattern. Once you connect both these lines, you will see a triangle-shaped figure in the chart.

Symmetrical Triangles Explained

You will benefit significantly by waiting for the breakout candle to close above the pattern. This will prevent you from taking unnecessary risks, and you’ll avoid many of the false breakouts. This means that before the Symmetrical Triangle Pattern forms, we need to have a prior trend (bullish).

What Is a Symmetrical Triangle Pattern?

For traders, this is the perfect entry level with a stop loss at the lowest level of the previous ‘bearish’ price swing. Ensure the pennant aligns with the prevailing trend – bullish or bearish. Estimate the target by measuring the flagpole’s https://1investing.in/ length and extending it in the direction of the breakout. Ensure the flag aligns with the prevailing trend, either bullish or bearish. Look for a rectangular-shaped pattern with a slight slope following a strong price movement.

How to Trade Symmetrical Triangles- Winning Strategies

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Place the protective stop loss below the swing low before the triangle breakout. A common approach is to hide your stop loss just below the last swing low before the breakout. You can also use different stop-loss techniques, such as placing the SL below. Repeat the same process with at least two lower highs using a descending trendline. Based on the development of this reversal pattern, we close the other 50% of the trade. The more you move the stop to the left, the bigger the distance is between the stop and the entry price.

That’s why they are more common to show up in the middle of the trend acting as continuation patterns. To distinguish further, the symmetrical triangle relies on two converging trend lines, whereas the pennant involves a flagpole (the initial sharp move) and the flag (the consolidation). To calculate the potential breakout points, traders often measure the height of the triangle (highest point to lowest point) and add it to the breakout level. In technical analysis, it’s one of the most popular triangle price formations that falls under the category of continuation patterns. If you like price geometry, nothing beats the Symmetrical Triangle trading strategy.

To understand the psychology of charts and patterns, feel free to check out our chart pattern trading strategy guide. The Symmetrical Trading Pattern strategy marks a pivotal approach in technical analysis, offering traders a nuanced lens to interpret market trends and movements. They identify the last two bottoms, which are part of the support line of the symmetrical triangle. The proper location of a stop loss when trading symmetrical triangles is below the opposite side of the breakout. Buyers eventually lose patience and rush into the security above the resistance price, which triggers more buying as the uptrend resumes. The upper trendline, which was formerly a resistance level, now becomes support.

Real World Example of a Symmetrical Triangle

The supply line is the top line of the triangle and represents the overbought side of the market when investors are going out taking profits with them. When this happens, traders look for the price level at which both trend lines intersect, which serves as a breakout level. A symmetrical triangle results when there is an area of indecision within the marketplace where buyers are attempting to push prices higher but are met with resistance by sellers. As you probably guessed, descending triangles are the exact opposite of ascending triangles (we knew you were smart!). There are three primary types of triangles that tend to form in price charts – ascending descending and symmetrical.

In the chart above, you can see that the buyers are starting to gain strength because they are making higher lows. If you had placed another entry order below the slope of the higher lows, then you would cancel it as soon as the first order was hit. In this example, if we placed an entry order above the slope of the lower highs, we would’ve been taken along for a nice ride up. If this were a battle between the buyers and sellers, then this would be a draw. Open your account with Pepperstone or eToro to access award-winning platforms, tight spreads, and innovative tools for Forex and CFDs.

In the dynamic world of trading, riding the bull trend is akin to catching a wave at just the right moment. A Bull Trend Trading Strategy involves identifying and entering trades during an upward market trend. It’s about making strategic moves, utilizing indicators like Moving Averages, RSI, and MACD, to align with the bullish momentum.

The information provided in this content by Coinpedia Academy is for general knowledge and educational purpose only. It is not financial, professional or legal advice, and does not endorse any specific product or service. The organization is not responsible for any losses you may experience. If you find any of the contents published inappropriate, please feel free to inform us. Eventually, the area of indecision is resolved and the formation explodes, usually with an increase in volume. Tension builds as price consolidates towards the apex and traders are waiting to jump in if either trend line is broken.

Trading the symmetrical triangle and learning how to utilize it effectively can significantly enhance one’s trading approach and potential profits. Moreover, the prevailing trend before the ascending triangle chart pattern can provide a clue about the triangle breakout direction. We encourage you to only trade this in the direction of the prevailing trend for high-probability setups. Also, notice that the initial symmetrical triangle breakout on the image is bearish.