Triangle Chart Pattern Technical Analysis

  • With the triangle chart pattern, traders can be helped to identify prices in the market when trend movements are difficult to identify. How do we recognize this pattern? And what kind of order entry method can we apply to maximize opportunities from the triangle pattern?

    The triangle chart pattern in forex trading is interpreted as a horizontal type trading pattern.

    The triangle is in the widest position and then forms triangular points because the market position is sideways and the trading range narrows.

    The triangle chart pattern in forex trading refers more to technical analysis. Technical traders must be very familiar with this one pattern besides candlesticks pattern.

    And if the ability of a trader is able to recognize the triangle pattern of this chart pattern well, it will make a smile with the profit gained

    Basically, a triangle chart pattern forex consists of 3 types, namely

    1. Symmetrical triangle pattern

    2. Ascending triangle pattern

    3. Descending triangle pattern

    These chart patterns are often found in practice, and now we will learn how to trading with triangle chart pattern, or you can practice in forex demo account

    The following is an explanation of each of these patterns along with the trading method.


    Symmetrical Triangle Pattern

    The Symmetrical Triangle pattern is formed when there is a slope of high prices and low prices which converge towards one point. This condition occurs because of unclear prices whether to rise or fall so that price consolidation occurs in the market.

    Symmetrical triangle patterns occur in markets where the price direction is not clear. Therefore, the top and bottom trend lines appear to be the same, there is no flat.

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    Buyers and sellers who provide market conditions like this, make the highest price towards the lowest price and the lowest price towards the highest price. This situation is very confusing for investors to decide whether to open a position, open or close a position because there is a possibility of a breakout. Because it is better for investors to wait for the direction of the breakout to go in which direction then decide the next step.

    In this case, the buyer and seller hold a consolidation where the buyer buys at a higher price and the seller sells at a lower price.

    When both slope lines almost meet then the direction of the price movement will immediately breakout or penetrate one of the two slope lines.

    In this pattern, we cannot determine the exact breakout direction but surely there will be a breakout so that the best strategy is to be able to take advantage by opening buy positions above the high-level slope line and sell positions below the low slope line, which is pending buy stop and sell stop orders

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    By placing pending buy stop and sell stop orders, if there is a breakout either bearish or bullish then a pending order will be hit, and we can cancel another pending order, in the case because occurred of a bullish breakout, so we manually delete the pending order sell stop

    While the target level or take profit in pip is determined by the height of the triangle (x).


    Ascending triangle pattern

    The Ascending Triangle pattern can be considered as a continuous pattern of old trends that have taken place. The Ascending Triangle forms like a triangle with a horizontal line side above which illustrates an uptrend chart and a bullish price. Sometimes this pattern is also formed at the end of the downtrend and gives a sign of a price reversal.

    This pattern illustrates that an uptrend is occurring with the bottom trend line going on an increase in the support level and it is difficult to break the resistance level. So that the price movement tries to break at the resistance level. When the price has touched the resistance level there is an uptrend.

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    In this condition, the seller stays at a certain selling price while the buyer buys at a higher price so that the price is getting closer to the selling price.

    When the buyer's price is almost the same as the seller's selling price, then the direction of the price movement will immediately break out one of the resistance levels or the low-level slope line.

    In many cases indeed prices can break the resistance level where buying sentiment is indeed stronger than selling sentiment so prices continue to rise and break the seller's maintained level, especially if the situation before the formation of this pattern prices tend to move uptrend.

    In this case, the ascending triangle pattern shows a trend continuation. But not infrequently the resistance level is too strong and buyers cannot break out. This situation can be caused by buying sentiment which decreases or the number of sellers increases so that the price moves through the low slope line and moves bearish.

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    If this pattern is formed we also cannot determine the direction of the breakout whether it will rise or fall, but surely there will be a breakout so that it can take advantage by opening a buy stop position above the resistance level and sell stop position below the low-level slope line.

    If with the example above there is a breakout in the direction of the low-level slope line and the sell stop order is executed so that we can manually delete the other order, in this case, the buy stop

    For-profit targets, the target level or take profit in pip is determined by the height of the triangle (x).


    Descending triangle pattern

    The descending triangle pattern places the highest price position in a downward position towards the lowest position. Descending Triangle is also the opposite of the ascending triangle, which is a triangle pattern that describes price movements that are difficult to penetrate the support level so many times that there is a price downtrend. This pattern is often used as an indicator of a bearish signal (downtrend) in forex trading.

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    When the seller's selling price is almost the same as the buyer's price, then the direction of the price movement will immediately breakout or break through one of the support levels or the slope level high line.

    This pattern happens, in many cases prices can break the support level where selling volume is stronger than buying volume, but not infrequently the support level is too strong and buyers cannot break out due to diminishing selling sentiment or increasing number of buyers so prices move breaks the high-level slope line and move bullish.

    Then how to determine the strategy if this descending triangle pattern appears and we identify it?

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    Just like the strategy for the symmetrical triangle and ascending triangle pattern, we open long positions above the high-level slope line and sell stop positions below the support level. In this example there is a breakout in the direction of the high-level slope line so that the buy stop order is executed so we cancel the other order, in this case, is a sell stop.

    And to determine the profit target also the same as the triangle pattern before, we determine the take profit level by measuring the height of the triangle (x).


    Conclusion

    The three patterns above are the symmetrical triangle, the ascending triangle and the descending triangle sometimes gives fake signals. Because the depiction sometimes makes a price breakout.

    It is important for you to look further if you use these patterns. As you have to wait for the price breakout to go where is it bullish or bearish then you can decide what steps you will take.

    But you can also try the pending order strategy as exemplified above

    Besides that, you also need to monitor the trading volume whether it's on the symmetrical triangle pattern, the ascending triangle or the descending triangle.

    Monitoring this trading volume is done when a breakout to see what is happening with the market and then you can decide on the next step.

    There is another way of reading the ascending triangle and descending triangle position, that is by looking at the candle chart.

    You have to wait for a full candle chart above the pattern when the pattern is an ascending triangle, and the candle chart is fully closed below the pattern when the pattern is a descending triangle.