Triangle Pattern and its Types
Thirty Fourth session of Forex Training
Welcome back to Forex professional training in a financial markets.
In this session Triangle Pattern and its types; Ascending, Descending, Symmetrical, Bullish and Bearish Triangles will be studied.
Triangle
Triangle is a continuation pattern which shows an agreeing direction with current trend direction.
On an upward trend it confirms current uptrend, while on a downtrend it confirms a downward direction.
Triangle is classified into two groups: Bullish and Bearish Triangles.
A Bearish Triangle is a continuation pattern formed on a downtrend, which consists of 2 to 3 waves, 4 to 6 swings.
Normally 6 swing Triangle pattern is wider than a 4 swing Triangle pattern.
Waves can be surrounded by two lines, the upper line is a support and the lower line is a resistance.
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In a Symmetrical Triangle, both support and resistance lines are gradient with opposite angles.
Descending Triangle has a resistance level, while support line is a downward Trendline.
Descending Triangle has more power and effect rather than the Symmetrical Triangle, because peaks of waves in a Descending Triangle have a descending trend while valleys have equal levels.
H, wave height, can be determined by calculating the distance between the peak and the valley of the first wave.
The number on each valley and peak can be beneficial, thus H is the swing between number 1 and 2.
Breakout point would be formed after 5 or 7 swings, where prices cross a resistance line.
A Sell order would be placed on a breakout point where TP price is H or H/2 pips lower than the breakout point, while SL is higher than the last peak.
A Bullish Triangle, like a Bearish type, is a continuation pattern with 4 to 6 swings, 2 to 3 waves, formed on an uptrend.
Swings are surrounded by the support and resistance lines. The upper line is a resistance while the lower line is a support.
In a Symmetrical Triangle, both the support and resistance lines are gradients with opposite angles.
An Ascending Triangle has a resistance level, while support line is an upward Trendline.
An Ascending Triangle has more power and effect rather than a Symmetrical Triangle because valleys of an Ascending Triangle have an upward trend while peaks have equal levels.
H, wave height, can be determined by calculating the distance between the peak and the valley of the first wave, swing between number 1 and 2.
Breakout point would be formed after 5 or 7 swings, where price crosses the resistance line.
A Buy order would be placed on a breakout point where TP price is H or H/2 pips higher than the breakout point, while SL is lower than the last valley.
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Trader can find several examples on the chart in MT4 platform. On a Gold symbol, a Symmetrical Bullish Triangle has formed with 4 swings.
Swing between number 1 and 2 specifies the H amount, where a Trendline can be drawn over it. Trader can relocate that Trendline to the breakout point.
Trend has passed TP price. Even using a Fibonacci would be advantageous to determine H and H/2.
Another Bullish Triangle has formed with an Ascending format due to its level peaks and an upward trend valleys.
H on this Triangle is 3460 pips, consequently TP price is 3460 pips over the Breakout point that eventually has been reached by the market price.
On the most recent trend, a Bearish Symmetrical Triangle pattern is going to be formed.
Trader can place a Sell order on the Breakout point, TP would be 2554 pips, H amount lower than the Breakout and SL would be higher than the last peak.
These waves can form a Double Bottom pattern too, thus a trader must wait until a pattern is completely formed.
On another Timeframe, a trader can find more Triangle patterns. Several Triangle patterns have been formed on an upward trend.
On another symbol chart, like USDJPY, a trader can detect a Symmetrical Triangle on a downward trend.
Triangle pattern can be combined with a special candlestick pattern to create a more reliable and sound pattern.
That concludes this session, until next time and another session take care.