Triangles

Triangle patterns are continuation patterns that appear in the form of a triangle on price charts. They are formed by two converging trendlines, with the price bouncing between these lines. There are three main types of triangle patterns:

  1. Ascending Triangle: This pattern is formed when there is a resistance level and the higher lows formed by the lows of the price are connected with a trendline. The pattern is typically seen as bullish, indicating accumulation as the price makes higher lows while buyers overcome selling pressure to break the resistance level.

  2. Descending Triangle: This pattern is formed when there is a support level and the lower highs formed by the highs of the price are connected with a trendline. This is typically seen as bearish, indicating distribution as the price makes lower highs, with sellers overcoming buying pressure to break the support level.

  3. Symmetrical Triangle: This pattern is formed when there are lower highs and higher lows and the lines drawn to connect these highs and lows converge towards each other. This pattern doesn't have a bullish or bearish bias and a breakout can occur in either direction.

Traders usually enter a long position when the price breaks above the upper trendline in an ascending triangle, or a short position when the price breaks below the lower trendline in a descending triangle. For symmetrical triangles, traders may enter a long position on a break above the upper trendline or a short position on a break below the lower trendline.

As with all chart patterns, it's important to consider the triangle patterns within the larger market context and to use other technical analysis tools to confirm signals.

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