Here, the descending triangle is identified by the falling resistance trend line but prices bouncing off a horizontal support level. The following chart, figure 4 illustrates a trading example of the descending triangle.įigure 4: Descending Triangle trade example The price objectives are similar to that of the ascending triangle as shown in the chart below. The descending triangle is characterized by a horizontal support level followed by a falling resistance trend line. The descending triangle patterns indicate a move to the downside.
The following chart, Figure 2 illustrates the ascending triangle trade.įigure 2: Ascending Triangle Trade Example Stops are placed at the second trough (or low) formed just before the break out or at a more valid price level. Measuring the distance from the lowest point to the horizontal resistance level, we obtain the price objective by projecting the distance on the break out of the ascending triangle. The trend line must be tested at least twice for the triangle to be valid. The chart below illustrates the ascending triangle and the price targets.Īs we can see, the ascending triangle has a horizontal resistance line, with a rising support trend line. When this pattern occurs within a prevailing uptrend, it can signal a very reliable continuation of the uptrend. The ascending triangle pattern is identified by a horizontal resistance line, with a rising support trend line.
You can observe this in the illustrations in the rest of this article. One of the important criteria to bear in mind when trading triangles is that there should be at least 4 points of reaction within the triangle. Triangles are mainly categorized into the following:Īs with most chart patterns, triangles are also best identified with using a line chart as the patterns are easier to spot and trade. Meaning that depending on where they occur within the trend, the triangle that is formed signals a continuation of the trend or can also be traded as a reversal pattern. The triangle patterns fall under the continuation patterns. These triangle patterns are relatively easy to trade and can be formed across different chart time frames. They indicate a period of congestion, represented by falling resistance trend line or rising support trend line with a horizontal support or resistance lines. Triangle chart patterns are one of the more commonly found chart patterns.
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