Symmetrical Triangle
These triangles are chart formations in which the slope of the price’s peak and price’s low converge at a point making it look like a triangle. During this formation period, the market is experiencing lower “highs” and higher “lows”. This essentially implies that neither buyers nor sellers are generating enough momentum to push the price for a new trend. If we regarded this as a battle between both buyers and sellers, this would indicate a stalemate, for now.
This is also known as a consolidation pattern.
Both the buyers and sellers are not pushing the price toward either side. As this happens, the market is experiencing lower “highs” and higher “lows”. Once these slopes converge, a “breakout” becomes imminent.
Although we do not know if the market is going to break out on the low side or high side, we definitely know that the breakout will happen and most likely volatility will increase making for a strong move in either of the directions.
To take advantage of this, we either place entry orders above the lower “highs” slope (Buy Stop to enter into a position) or below the lower “lows” slope (Sell Stop to enter into a position). Since the breakout is imminent, we can capitalize on this information regardless of the direction of the price movement.
Now let's check some observations:
- SL placed at point C
- TP placed with 2.5 RR ratio
- ADX increases in value ( Trend becomes stronger)
These triangles are chart formations in which the slope of the price’s peak and price’s low converge at a point making it look like a triangle. During this formation period, the market is experiencing lower “highs” and higher “lows”. This essentially implies that neither buyers nor sellers are generating enough momentum to push the price for a new trend. If we regarded this as a battle between both buyers and sellers, this would indicate a stalemate, for now.
This is also known as a consolidation pattern.
Both the buyers and sellers are not pushing the price toward either side. As this happens, the market is experiencing lower “highs” and higher “lows”. Once these slopes converge, a “breakout” becomes imminent.
Although we do not know if the market is going to break out on the low side or high side, we definitely know that the breakout will happen and most likely volatility will increase making for a strong move in either of the directions.
To take advantage of this, we either place entry orders above the lower “highs” slope (Buy Stop to enter into a position) or below the lower “lows” slope (Sell Stop to enter into a position). Since the breakout is imminent, we can capitalize on this information regardless of the direction of the price movement.
Now let's check some observations:
- SL placed at point C
- TP placed with 2.5 RR ratio
- ADX increases in value ( Trend becomes stronger)