CHART PATTERN - TRIANGLES

In this blog we would learn about the types of triangles pattern and “How to trade them better?”

In this blog I would mainly emphasise on important points that should be noted before trading the above triangles.

There are 3 types of triangle namely -

• Ascending triangle 
• Descending triangle 
• Symmetrical triangle 

ASCENDING TRIANGLE 

Triangle which have a horizontal resistance and makes a higher low pattern as in the image below-

DESCENDING TRIANGLE 

Triangle which have a horizontal support and a lower high pattern as shown in the image below-

SYMMETRICAL TRIANGLE  

A triangle formed by making higher lows and lower high as shown in the image below-

POINTS THAT SHOULD BE NOTED BEFORE TRADING A TRIANGLE PATTERN -

• For a triangle to be reliable price should cross the triangle multiple times filling the triangle, an empty triangle is not reliable and hence should be traded with cautious or not be traded at all. 
• Volume should be decreasing at the start and a spurt in volume near the breakout. 
• More than 60% of the breakout in the pattern comes for the retest of the pattern, so manage your trade accordingly. 
• Triangle forming in the middle of the year price chart area are less reliable than forming at years low or high. 
• Be aware of FAKE breakout and breakdown as they occur more often in the pattern. 
• Triangles are considered both CONTINOUS and REVERSAL pattern. It is therefore very important to trade the triangle in the DIRECTION of breakout. 
• Breakout around 62-65% of the APEX is considered good any breakout before that would very much likely a premature breakout. Apex is the meeting point of the 2 converging trend lines forming the triangle. 

If we are trading on the basis of any pattern it is very much advisable to have a checklist of that pattern, so that we could note “How much reliable the pattern is” as trading is a GAME OF PROBABILITY and we should trade only when the probability of success is more in our favour. 

Happy Investing.