Symmetrical Triangle Price Pattern
The symmetrical triangle with its converging lines show that both sides (buyers and sellers) are equally matched, which makes it hard to predict which side the breakout is going to happen.
Since it is a continuation pattern, the odds will tend to favour direction of the existing trend, but it is still much harder to trade compared to the next 2 triangle patterns.
Ascending Triangle Price Pattern
The ascending triangle, with its bottom line sloping up, shows a bullish bias, as this indicates a series of higher lows.
Recap: A series of higher lows and higher highs is an uptrend.
The flat line on top, which now serves as resistance, becomes a clear level for price to attack and break, and if it succeeds, will lead to higher highs.
Hence, there is a higher probability of an upside breakout for the ascending triangle, especially if it forms in the middle of an existing long-term uptrend.
Descending Triangle Price Pattern
The descending triangle, with its top line sloping down, shows a bearish bias, as this indicates a series of lower highs.
Recap: A series of lower highs and lower lows is a downtrend.
The flat line at the bottom, which now serves as support, becomes a clear level for price to attack and break, and if it succeeds, will lead to lower lows.
Hence, there is a higher probability of a downside breakout for the descending triangle, especially if it forms in the middle of an existing long-term downtrend.
Do you think that these patterns are more accurate on a short term or long term charts?
Actually, they work for all timeframes, including long-term and short-term. On the shorter-term, you will see them appear more frequently, so you filter them out to pick the best ones. On the other hand, om the longer-term, there will be less noise and less chance of a false pattern.
Thanks for the reply!
You’re welcome, love to help!
“This price projection technique can be used in conjunction with other methods, such as support and resistance levels, and if there is any confluence, gives an added layer of confirmation”, I also understand there are other recommendations that the risk to reward ratio is 1:3, is it advisable?
The price projection actually has nothing to do with the reward to risk ratio (RRR). The price projection gives you a potential target price based on the pattern, whereas the RRR is the ratio of your potential gain (difference between target and entry price) to the potential loss (difference between entry price and stoploss).
Thanks for getting back. So what are methods do you use personally?
Thanks for sharing this info! Appreciated!
Hello. I usually use the breakout and pullback method myself.
I like to see breakouts. The signs are more obvious and easier to analyze.
Just starting out here! Learning these cute little patterns 😀
How do you identify false breakouts or pullbacks?