However, triangle patterns can also be observed and used for trading on shorter timescales, although doing so leaves the drawing of the triangle patterns up to a greater degree of interpretation. For example, strong triangle patterns on daily chart require a prior trend that is at least a few months old and typically develop for several months before a breakout occurs. Triangle patterns are most commonly applied on daily charts and interpreted over a period of several months. Symmetrical triangles are a sign of consolidation and usually result in a continuation of the prior trend, although they can also indicate reversals. Symmetrical triangles have descending highs and ascending lows such that both the upper and lower trendlines are angled towards the triangle’s apex. Descending triangles have a falling upper trendline as a result of distribution and are always considered bearish signals. Ascending triangles have a rising lower trendline as a result of accumulation and are always considered bullish signals regardless of whether they form after an uptrend or downtrend. Ascending and Descending TrianglesĪscending and descending triangle patterns are right-angle triangles in that the line extending along two or more lows or two or more highs, respectively, is horizontal. Triangle patterns come in three varieties – ascending, descending, and symmetrical – although all three types of triangles are interpreted similarly. Triangle PatternsĪ triangle pattern forms when a stock’s trading range narrows following an uptrend or downtrend, usually indicating a consolidation, accumulation, or distribution before a continuation or reversal. Although triangles more frequently predict a continuation of the previous trend, it is essential for traders to watch for a breakout of the triangle before acting on this chart pattern. Unlike other chart patterns, which signal a clear directionality to the forthcoming price movement, triangle patterns can anticipate either a continuation of the previous trend or a reversal. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out.Triangle patterns are a chart pattern commonly identified by traders when a stock price’s trading range narrows following an uptrend or downtrend. What Does the Ascending Triangle Tell You?Īn ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. A profit target is calculated by taking the height of the triangle, at its thickest point, and adding or subtracting that to/from the breakout point.A stop loss is typically placed just outside the pattern on the opposite side from the breakout.A short trade is taken if the price breaks below the lower trendline.A long trade is taken if the price breaks above the top of the pattern.A breakout in any direction is noteworthy. Ascending triangles are considered a continuation pattern, as the price will typically break out of the triangle in the price direction prevailing before the triangle, although this won't always occur. The trendlines of a triangle need to run along at least two swing highs and two swing lows.
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