Hello, everyone!👋(Reading time less than 7 minutes⏰).
I’m here with another educational post to help you learners become super traders gradually.
🔅 As you know, various tools are usually used in any financial market to analyze all types of stocks, cryptocurrencies, and assets. Chart patterns are one of the essential tools used in technical analysis, and analysts evaluate the market movement and prepare to trade based on technical-fundamental studies.
🔅 The Symmetrical Triangle is one of the most used classic continuous patterns in the field, but it can sometimes turn into reversal patterns, as some analysts say.
🔷 So I’ll explain the following in this article:
---------------------------------------------------------------------------------------------------------
Triangle Pattern:
🔅The triangle pattern is one of the most well-known patterns many traders spend time on. A triangle is a trend continuation pattern that can occur in upward or downward trends. This triangle pattern is formed when a stock, cryptocurrency, or whatever shrinks towards an uptrend or downtrend.
The pattern represents a pause in the price trend, and the price consolidates in a range.
🔅 The triangle pattern consists of two converging lines with different slopes depending on the type. At least four major pivots are needed in the specific time frame to form a triangle pattern.
Basically, to form a triangle, 45 to 60 candles are needed in the specific time frame.
🔅 The take-profit of this pattern is considered the distance from the first top to the first bottom inside the triangle.
🔷 According to research, 84% agree that the triangle pattern is a continuation pattern that is divided into three types as follows:
---------------------------------------------------------------------------------------------------------
One of the types of triangles that can lead you to money is Symmetrical Triangle which I’ll explain here:
Symmetrical Triangle Pattern in Upward Trends:
Take a look at the picture below. You can see the price forms tops and bottoms after an upward trend and then forms lower tops and higher bottoms.
🔅 Now try to draw a resistance line at the top and a support line at the bottom. What do you see? Yeah! That’s a triangle. These two lines will make a tip called the triangle's apex. If the four pivots(at least), two tops and two bottoms, are connected with a line, you can say a Symmetrical Triangle pattern in an upward trend has occurred.
🔅 It’s noted that if the price breaks the support trend line and drops, you’ll see this as a reversal pattern or a Symmetrical Triangle in the downward trend. Not always; a Symmetrical Triangle is a continuous pattern. So Watch out!
Here’s a picture of a reversal Symmetrical Triangle and how to trade while it is considered a reversal.
How to trade on the Symmetrical Triangle in an upward trend:
1-After the pattern completes, you must wait for the pattern to give us the entry confirmation(the upper line of the Symmetrical Triangle).
2-Try to open a long position when the real breakout happens. That can make a good profit. The real breakout occurs when a green candle like the Marubozu candle closes above the upper line of the Symmetrical Triangle or the resistance line.
3-Don’t forget to put a stop-loss. That will be below the breakout candle or below the prior candle’s bottom.
The distance between the first top and the first bottom in the triangle would be one of high risk-to-reward ratio take-profit points.
The other way to take the profit is to draw a line from the first top facing the support trend line along.
---------------------------------------------------------------------------------------------------------
Symmetrical Triangle Pattern in Downward Trends
🔅 Another trend that a Symmetrical Triangle can move is downward trend when the price continues downward after forming the pattern.
🔅 Luckily, one of the best tools that can help you earn lots of money is the Symmetrical Triangle because it supports two-sided markets. But the question is how this type of triangle forms. Stay with me.
🔅 Imagine you’re walking through the bushes for a long time, then you’ll get tired, and you don’t feel energetic in your feet to move on. So do buyers and sellers in the financial markets.
🔅 When the price of an asset enters a converging trend of lower tops and higher bottoms, buyers and sellers test how strong the trend is. The buyers make bottoms at a higher price as sellers prevent the creation of a higher top.
🔅 In this case, the sellers are mostly winners, so better to be a seller rather than a buyer. Like the pattern I already discussed, the Symmetrical Triangle pattern in a downward trend needs at least four significant pivots to be confirmed.
🔅 There's also a possibility of breaking the upper line of the Symmetrical Triangle on the top after the Symmetrical Triangle pattern formation. The reversal pattern has occurred in this case, and the long position is considered a plan.
How to trade on the Symmetrical Triangle in a downward trend:
1-You have to wait for the candles to break the lower line of the Symmetrical Triangle. But the only key point is that if the breakout is valid. So if the breakout candle closes below the lower line of the Symmetrical Triangle, it’s time to open a short position.
2-The stop-loss will be above the last top. Therefore, in case of opening a short position on an asset, you can also place your stop-loss above the breakout candle for a higher risk-to-reward ratio.
3-The price targets will be 1) the distance between the first bottom and the first top, or 2) you can draw a line from the first bottom facing the resistance line.
🔷 Below, you can see a Symmetrical Triangle in a downward trend and how you can trade with it.
---------------------------------------------------------------------------------------------------------
The Importance of Trading Volume in the Symmetrical Triangle Pattern
🔅 The asset chart is in correction as long as the price chart is inside the Symmetrical Triangle pattern.
🔅 The trading volume in the pattern process will be neutral as most traders are waiting for the follow-up movement of the asset.
🔅 The closer the chart gets to the apex of the triangle to depart from the pattern, the range of fluctuations and the trading volume become less and less.
🔅 The importance of trading volume in the Symmetrical Triangle pattern can be seen near the exit from the pattern.
🔅 If the previous trend of the chart was bullish, it is likely that the trading volume will increase dramatically if the pattern is broken.
🔅 Also, the trading volume will decrease near the triangle's apex, but it increases instantly after breaking out, whether it is an upward or downward trend.
🔅 For this purpose, examining the trading volume in different areas of the pattern can greatly help us better understand the trend and predict the future of the asset.
🔅 In a way, you always have to wait for the chart to go out of the pattern, and by checking the direction of the trend and trading volume, you can make a better decision about buying or selling your currencies.
---------------------------------------------------------------------------------------------------------
Symmetrical Triangle in Elliott Theory
The Symmetrical Triangle called the “Contracting Triangle,” is a basic pattern in Elliott Waves. Elliott triangles can be considered one of the stable consolidation patterns in the market, which can be divided into five waves. To return, each of these five waves carries three sub-waves.
The waves of the triangle are named A, B, C, D, and E.
The Symmetrical Triangle can often be seen as a continuation pattern that creates a pause in the trend and then resumes.
In this pattern, wave A, which is the biggest wave in the pattern, can be a zigzag, double zigzag, triple zigzag, or a flat pattern, and wave B can only be a zigzag, double zigzag, or triple zigzag.
Waves D and C can also move in their pattern by a zigzag pattern, and finally, an E wave is formed, which can be a zigzag, double zigzag, triple zigzag, and sometimes a triangle.
In a Symmetrical Triangle, waves B, C, and D often cover 61.8% of the previous wave.
Finally, by drawing this pattern's up-and-down trend lines, the lines get close to each other and cannot be parallel.
---------------------------------------------------------------------------------------------------------
Conclusion:
🔔 In this article, you learned about the Symmetrical Triangle and how to trade using the pattern. You now know where to enter and exit the market to make a suitable profit. Don’t forget to follow your capital management to lower the trading risks.
I’m here with another educational post to help you learners become super traders gradually.
🔅 As you know, various tools are usually used in any financial market to analyze all types of stocks, cryptocurrencies, and assets. Chart patterns are one of the essential tools used in technical analysis, and analysts evaluate the market movement and prepare to trade based on technical-fundamental studies.
🔅 The Symmetrical Triangle is one of the most used classic continuous patterns in the field, but it can sometimes turn into reversal patterns, as some analysts say.
🔷 So I’ll explain the following in this article:
- Defining the triangle pattern
- Getting to know the structure of a Symmetrical Triangle
- Types of Symmetrical Triangles
- How to trade using the Symmetrical Triangle pattern
- Price target after Symmetrical Triangle pattern
- The importance of trading volume in the Symmetrical Triangle pattern
---------------------------------------------------------------------------------------------------------
Triangle Pattern:
🔅The triangle pattern is one of the most well-known patterns many traders spend time on. A triangle is a trend continuation pattern that can occur in upward or downward trends. This triangle pattern is formed when a stock, cryptocurrency, or whatever shrinks towards an uptrend or downtrend.
The pattern represents a pause in the price trend, and the price consolidates in a range.
🔅 The triangle pattern consists of two converging lines with different slopes depending on the type. At least four major pivots are needed in the specific time frame to form a triangle pattern.
Basically, to form a triangle, 45 to 60 candles are needed in the specific time frame.
🔅 The take-profit of this pattern is considered the distance from the first top to the first bottom inside the triangle.
🔷 According to research, 84% agree that the triangle pattern is a continuation pattern that is divided into three types as follows:
- Symmetrical triangle
- Ascending Triangle
- Descending Triangle
One of the types of triangles that can lead you to money is Symmetrical Triangle which I’ll explain here:
Symmetrical Triangle Pattern in Upward Trends:
Take a look at the picture below. You can see the price forms tops and bottoms after an upward trend and then forms lower tops and higher bottoms.
🔅 Now try to draw a resistance line at the top and a support line at the bottom. What do you see? Yeah! That’s a triangle. These two lines will make a tip called the triangle's apex. If the four pivots(at least), two tops and two bottoms, are connected with a line, you can say a Symmetrical Triangle pattern in an upward trend has occurred.
🔅 It’s noted that if the price breaks the support trend line and drops, you’ll see this as a reversal pattern or a Symmetrical Triangle in the downward trend. Not always; a Symmetrical Triangle is a continuous pattern. So Watch out!
Here’s a picture of a reversal Symmetrical Triangle and how to trade while it is considered a reversal.
How to trade on the Symmetrical Triangle in an upward trend:
1-After the pattern completes, you must wait for the pattern to give us the entry confirmation(the upper line of the Symmetrical Triangle).
2-Try to open a long position when the real breakout happens. That can make a good profit. The real breakout occurs when a green candle like the Marubozu candle closes above the upper line of the Symmetrical Triangle or the resistance line.
3-Don’t forget to put a stop-loss. That will be below the breakout candle or below the prior candle’s bottom.
The distance between the first top and the first bottom in the triangle would be one of high risk-to-reward ratio take-profit points.
The other way to take the profit is to draw a line from the first top facing the support trend line along.
---------------------------------------------------------------------------------------------------------
Symmetrical Triangle Pattern in Downward Trends
🔅 Another trend that a Symmetrical Triangle can move is downward trend when the price continues downward after forming the pattern.
🔅 Luckily, one of the best tools that can help you earn lots of money is the Symmetrical Triangle because it supports two-sided markets. But the question is how this type of triangle forms. Stay with me.
🔅 Imagine you’re walking through the bushes for a long time, then you’ll get tired, and you don’t feel energetic in your feet to move on. So do buyers and sellers in the financial markets.
🔅 When the price of an asset enters a converging trend of lower tops and higher bottoms, buyers and sellers test how strong the trend is. The buyers make bottoms at a higher price as sellers prevent the creation of a higher top.
🔅 In this case, the sellers are mostly winners, so better to be a seller rather than a buyer. Like the pattern I already discussed, the Symmetrical Triangle pattern in a downward trend needs at least four significant pivots to be confirmed.
🔅 There's also a possibility of breaking the upper line of the Symmetrical Triangle on the top after the Symmetrical Triangle pattern formation. The reversal pattern has occurred in this case, and the long position is considered a plan.
How to trade on the Symmetrical Triangle in a downward trend:
1-You have to wait for the candles to break the lower line of the Symmetrical Triangle. But the only key point is that if the breakout is valid. So if the breakout candle closes below the lower line of the Symmetrical Triangle, it’s time to open a short position.
2-The stop-loss will be above the last top. Therefore, in case of opening a short position on an asset, you can also place your stop-loss above the breakout candle for a higher risk-to-reward ratio.
3-The price targets will be 1) the distance between the first bottom and the first top, or 2) you can draw a line from the first bottom facing the resistance line.
🔷 Below, you can see a Symmetrical Triangle in a downward trend and how you can trade with it.
---------------------------------------------------------------------------------------------------------
The Importance of Trading Volume in the Symmetrical Triangle Pattern
🔅 The asset chart is in correction as long as the price chart is inside the Symmetrical Triangle pattern.
🔅 The trading volume in the pattern process will be neutral as most traders are waiting for the follow-up movement of the asset.
🔅 The closer the chart gets to the apex of the triangle to depart from the pattern, the range of fluctuations and the trading volume become less and less.
🔅 The importance of trading volume in the Symmetrical Triangle pattern can be seen near the exit from the pattern.
🔅 If the previous trend of the chart was bullish, it is likely that the trading volume will increase dramatically if the pattern is broken.
🔅 Also, the trading volume will decrease near the triangle's apex, but it increases instantly after breaking out, whether it is an upward or downward trend.
🔅 For this purpose, examining the trading volume in different areas of the pattern can greatly help us better understand the trend and predict the future of the asset.
🔅 In a way, you always have to wait for the chart to go out of the pattern, and by checking the direction of the trend and trading volume, you can make a better decision about buying or selling your currencies.
---------------------------------------------------------------------------------------------------------
Symmetrical Triangle in Elliott Theory
The Symmetrical Triangle called the “Contracting Triangle,” is a basic pattern in Elliott Waves. Elliott triangles can be considered one of the stable consolidation patterns in the market, which can be divided into five waves. To return, each of these five waves carries three sub-waves.
The waves of the triangle are named A, B, C, D, and E.
The Symmetrical Triangle can often be seen as a continuation pattern that creates a pause in the trend and then resumes.
In this pattern, wave A, which is the biggest wave in the pattern, can be a zigzag, double zigzag, triple zigzag, or a flat pattern, and wave B can only be a zigzag, double zigzag, or triple zigzag.
Waves D and C can also move in their pattern by a zigzag pattern, and finally, an E wave is formed, which can be a zigzag, double zigzag, triple zigzag, and sometimes a triangle.
In a Symmetrical Triangle, waves B, C, and D often cover 61.8% of the previous wave.
Finally, by drawing this pattern's up-and-down trend lines, the lines get close to each other and cannot be parallel.
Conclusion:
🔔 In this article, you learned about the Symmetrical Triangle and how to trade using the pattern. You now know where to enter and exit the market to make a suitable profit. Don’t forget to follow your capital management to lower the trading risks.
