Triangle
Candlefocus EditorThe ascending triangle is a bullish triangle pattern typically seen as a continuation pattern that usually forms with a flat upper trendline and a rising lower trendline. The ascending triangle develops when buyers are stepping in during a shorter period of time than normal, which is seen in stronger and higher closing prices. This type of triangle highlights a possible pending bullish breakout, most often confirming that bulls are in control and that, once broken, the price should move higher.
The descending triangle, on the other hand, is a bearish chart pattern and usually seen as a reversal pattern. It is created when the asset’s price is forming lower highs and a convergence of flat or downwards sloping lower trendline. Again, this type of triangle may provide indications that sellers are in control, which highlights that the price has the potential to move lower once the lower trend line is breached.
The symmetrical triangle, quite simply, is a triangle-shaped chart pattern that is neither bullish nor bearish. It is characterized by converging trendlines, which are created by lower highs and higher lows on a chart. This suggests that both buyers and sellers have conflicting views on price, resulting in slower momentum and a decrease in trading volume. With frequently calling for breakouts and reversals, breakout traders are often advised to be cautious with the symmetrical triangle.
Although triangles can provide strong signals and enable traders to anticipate and calculate target prices, there is no accurate way to determine when prices may break out. Some traders rely on the breaking of either trend line as a confirmation of a breakout, whilst other may wait for the indicator to close below one of the lines before entering a trade. Either way, it is important for traders to understand the risk-reward relationship of each triangle-type before making a trading decision.