Triangle Chart Patterns Complete Guide for Day Traders

The price makes a sideways structure when trading between two trendlines. Triangle pattern is a trend continuation pattern but it can break out from both sides. The price usually moves in continuation of the prevailing trend after breaking out from the pattern.

The triangle pattern’s potential target is calculated by measuring the total distance of a triangle pattern from top to bottom and forecasting that same distance from the point of breakout of the pattern. This is the most reliable and used method of calculating the potential target of the triangle pattern. Traders use the height of the pattern to project the potential price target because the consolidation within the pattern represents the magnitude of the price movement.

Technical analysts study these patterns to identify selling opportunities and predict future downward momentum in a stock. Technical analysts study these patterns to identify buying opportunities and predict future upward momentum in a stock. The image demonstrates how to use chart patterns, specifically a parallel channel, to set effective stop losses. The Scallop pattern is a technical charting pattern indicating a market is headed up or down with increasing volatility but no clear direction. triangle flag pattern The Scallop pattern appears as a series of higher highs and lower lows that form a symmetrical, rounded channel resembling the shape of a scallop shell. A short position is taken on the break of a lower low with stops above the prior swing high to trade this pattern.

What is the Bearish Pennant?

Connecting the swing highs with a trendline and the swing lows with a trendline results in a symmetrical triangle that signals the price is moving sideways. In the vast landscape of trading, mastering chart patterns is akin to navigating the markets with a finely tuned compass. Two powerful tools in a trader’s arsenal are the Symmetric Triangle and the Bullish Pole & Flag Pattern, both belonging to the family of Continuation Chart Patterns. The best way to trade a pennant pattern is to wait for the breakout from the converging trendlines.

1. The lower trendline is rising diagonally, indicating higher lows as buyers patiently step up their bids.
2. A symmetrical pattern forms when the price is narrowing under a downward sloping resistance line and an upward sloping support line.
3. The price makes a sideways structure when trading between two trendlines.
4. Thus, the lower upward sloping trendline is rising, and each subsequent low is higher than the previous one.
5. In ascending triangles the highs are the same across the triangle rather than descending, while in descending triangles the lows are the same across the triangle rather than ascending.
6. Chart patterns help traders spot momentum shifts, providing an early warning sign of potential trend reversions or breakouts.
7. This pattern occurs when the difference in the price between those two periods is substantial.

The pattern itself does not show the direction of potential price movement, but it does signal an imminent breakout of one of the triangle’s boundaries. The idea is to buy or go long whenever the asset price breaks above the upper trend line on huge volume. The formation of a bullish candlestick above the trendline signals that bulls are in control and likely to push prices higher. In contrast, a pennant pattern has converging trendlines, forming a small symmetrical triangle. A descending triangle pattern takes a minimum of 60 minutes to form on a 1-minute price chart up to a minimum of 60 years to form on a yearly price chart.

Tim Maunsell is a dedicated financial expert with a passion for simplifying complex financial concepts for everyday readers. He holds a degree in Economics from the University of Sydney and frequently contributes to leading financial blogs and publications. When not writing, Tim enjoys exploring new financial technologies and mentoring young professionals in the field. The screenshot shows an example of trading a “Symmetrical triangle” on the BTCUSD chart. Breakouts occur when the price has moved inside the triangle for long, resulting in the thinning of the triangle. As the end becomes narrow and narrow, the prospect of price breaking out is usually high.

After that, there is an upward impulse breakout and the destruction of the counter resistance. Momentum gives confidence to market participants and signals a continuation of an uptrend line or a bearish trend reversal. Both the symmetrical triangle and the pennant have conical bodies formed during a period of consolidation. Price consistently reaches higher lows and lower highs, creating two converging trendlines that form this conical shape. To find an ascending triangle pattern, look for a stock that had a strong uptrend and is now trading sideways.

Breakouts from pennant patterns, accompanied by strong volume, are key moments for forex traders, influencing their decisions on trade entries and exits. This pattern requires additional technical tools to enhance its probability. For example, the validity of a breakout from the triangle pattern cannot be confirmed properly without the volume indicator.

What Is a Symmetrical Triangle Pattern?

A triple bottom pattern forms when a security’s price tests a support level three times, creating three distinct low points at roughly the same price level, before breaking out above resistance. The pattern has the appearance of the letter “W” with the two higher lows forming the sides and the resistance level acting as the ceiling. The double top is a bearish reversal chart pattern that forms after an uptrend and signals a potential trend change from bullish to bearish. The double top is characterized by two consecutive peaks that reach approximately the same price level, separated by a moderate trough. Forex traders often leverage flags to fine-tune their entry and exit points, closely monitoring breakouts for confirmation and utilizing technical indicators to validate signals.

Level 1 vs. Level 2 Market Data

In the above chart, the price breaks above the resistance level, enticing traders (called breakout buyers) to enter long positions, expecting further upward momentum. However, instead of continuing to rise, the price fails to sustain this breakout. After briefly moving above the resistance, the price reverses sharply and falls back below the resistance level.

This can misguide the trader in taking wrong trading decisions which can further lead him to incur losses. A trader can enhance the probability of his trades by using a triangle chart pattern. Wedge pattern and pennants are similar because wedges and triangle patterns are both consolidation patterns that suggest a continuation or a potential reversal in the current trend. This way, you can easily backtest the triangle pattern by using previous price data. One of the best yet simplest triangle pattern strategies is when it is used with the volume indicator. The rest of the process is the same as it is when trading using the triangle pattern.

1. What they share in common is that the price range converges into a narrower range until the price breaks out either in the direction of the trend (continuation) or in the opposite direction (reversal).
2. A descending triangle pattern takes a minimum of 60 minutes to form on a 1-minute price chart up to a minimum of 60 years to form on a yearly price chart.
3. You should also place a take-profit at the lower side of the flag post.
4. Triangle patterns are a chart pattern commonly identified by traders when a stock price’s trading range narrows following an uptrend or downtrend.
5. The bearish candlestick pattern increases the strength of the trade setup along with other confluences gathered from technical indicators.
6. A “Symmetrical triangle” pattern is a chart formation where the price fluctuates between converging trend lines.

At this point, the selling pressure increases, and the price begins to turn around. Thus, the lower upward sloping trendline is rising, and each subsequent low is higher than the previous one. Bulls and bears are moving toward each other and meet at the resistance level. A symmetrical triangle pattern is not bullish or bearish by itself—it simply indicates a period of consolidation before a likely breakout. While there’s no definite way to predict whether the price will break up or down, you can use other technical indicators and sentiment indicators to forecast the direction of the breakout.

The range of this candlestick setup is taken as the minimal take profit range. Traders take additional confirmation from technical indicators and other price action tools to solidify a trade setup. Traders should anticipate a breakout over the resistance trendline if the Diamond Bottom serves as a reversal. This will confirm the pattern as a bottom and signal the start of an uptrend.