TRIANGLES

In technical analysis and price action, triangles patterns plays a main role.

A triangles pattern is a chart formation that occurs when the price of an asset moves within a converging range, forming triangle like structure on the chart.

A Triangle pattern is a chart formation that happens when the price of an asset moves sideways within two converging lines.

This usually happens in the middle of a trend and suggests that the trend will continue. When the price breaks out of the triangle in the direction of the previous trend, it can be a good time to take a position.

Below are main types of Triangles can be on chart:

  1. Symmetrical Triangle

    This pattern occurs when the price of an asset is moving between two trend lines, with the upper trend line acting as resistance and the lower trend line acting as support.

    As the price continues to move within this range, the distance between the trend lines narrows, forming a triangle pattern.

    The Symmetrical Triangle pattern doesn't depend on whether the market trend is going up (Bullish) or down (Bearish). What really matters is when the price breaks out of either the upper or lower trend line of the pattern.

    • The symmetrical triangle is a chart pattern that occurs when the price is making lower highs and higher lows, forming a triangle.
    • This pattern is considered indecisive because neither buyers nor sellers are able to gain control, causing the price to range within the triangle.
    • Only a breakout of one of the boundaries of the triangle can clarify the future price direction.
    • The price usually trades between trend lines which act as support and resistance levels.
    • As the price breaks out of the support or resistance line of the triangle, a trade can be taken based on the breakout direction.

  2. Ascending Triangle

    This pattern occurs when the price of an asset is trending upwards and faces a resistance level. As the price continues to rise, it meets the resistance level multiple times, forming a horizontal line.

    The lower trend line, which connects the higher lows, slopes upward, forming a triangle pattern.

    • The ascending triangle is formed in an uptrend and indicates a continuation of the uptrend.
    • It is characterized by a right-angled triangle with a flat resistance line and a rising support line.
    • The higher lows of the support line indicate that buyers are more aggressive than sellers, and the resistance line prevents prices from moving higher.
    • As the higher lows are formed, the market moves closer to the resistance line, suggesting that a breakout is likely.
    • When prices break out of the resistance line with significant volume, it confirms the continuation of the uptrend.
    • With successful breakout, position can be taken

  3. Descending Triangle

    This pattern occurs when the price of an asset is trending downwards and faces a support level. As the price continues to decline, it meets the support level multiple times, forming a horizontal line.

    The upper trend line, which connects the lower highs, slopes downward, forming a triangle pattern.

    • The descending triangle is formed in the downtrend and indicates the continuation of the downtrend.
    • It is characterized by a downward sloping triangle with a flat support line and a falling resistance line.
    • The lower highs of the resistance line indicate that sellers are more aggressive than buyers, and the support line prevents prices from moving lower.
    • As the lower highs are formed, the market moves closer to the support line, suggesting that a breakout is likely.
    • When prices break out of the support line with significant volume, it confirms the continuation of the downtrend.
    • This indicates the strength of bears and they are willing to sell more for the stock.

How to take position in the market?
- Depending on trading psychology and individual risk, some Traders follow below rules to enter into positions.

  1. Entry

    • Traders typically enter a trade when the price breaks out of the triangle pattern in the direction of the previous trend.
    • This breakout should ideally be accompanied by high trading volume to confirm the trend continuation.
    • Some traders may also wait for a retest(price correction) of the breakout level before entering the trade.

  2. Target

    • Minimum target for a triangle pattern trade is usually determined by measuring the initial height of the triangle and projecting it in the direction of the breakout.
    • This projection gives an approximate price target for the trade.

  3. Stop Loss

    • The stop loss for a triangle pattern trade is usually placed just below the support line for a long trade and just above the resistance line for a short trade.
    • This is done to limit potential losses if the price moves against the trade.

The Triangle pattern may not be as reliable in markets with low liquidity or penny stocks, where price movements can be erratic and difficult to predict.

Example-1 : Different ways to Trade based on self Risk, Market condition and Price movement

Example-2 : Formation of Descending Triangle pattern, which was Head and shoulder pattern before. Head and shoulder Failed but Descending Triangle Worked. Anything can happen in Live market.

Example-3 : Formation of Symmetrical Triangle pattern

Example-4 : Formation Ascending Triangle pattern

Example-5 : Formation of Descending Triangle

Example-6 : Descending Triangle and Ascending Triangle Psychology

Example-7 : Descending Triangle

Example-8 : Descending Triangle with Moving Average

Example-9 : Taking action on Symmetrical Triangle Pattern

Example-10 : Symmetrical Triangle pattern

Example-11 : Symmetrical Triangle Pattern

Example-12 : Symmetrical Triangle PAttern

Example-13 : Price bouncing on both Symmetrical Triangle trend lines. Only Breakout decides the future of market if you consider only this criteria



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