How to Trade Symmetrical Triangles Top Three Techniques! Symmetrical Triangle Strategy Analysis, Definition & Meaning

One of the biggest challenges we face as breakout traders, is false breakouts. As it sounds, a false breakout is when the market goes past the breakout level, and then reverses again, leaving everybody that acted on the breakout with a loss. When trading the Symmetrical Triangle Pattern, it’s worth keeping in mind that sometimes, these chart patterns can simply continue to move sideways and emerge into a consolidating market. Furthermore, the ascending triangle chart pattern uses multiple entry techniques. The Symmetrical Trading Pattern strategy marks a pivotal approach in technical analysis, offering traders a nuanced lens to interpret market trends and movements.

If one of the lines slopes at a higher angle than the other, it suggests that there is an imbalance between buying and selling pressure. For instance, if the upper line comes in at a significantly higher angle of attack than the lower line, it shows us that bears are stronger than bulls, and the other way around. Insights like these can then be used to gauge the likelihood of a breakout occurring to the downside or upside. This triangular-shaped pattern usually helps you to spot potential price breakouts to ride the next trend wave. The Symmetrical Triangle trading strategy is one of the most proficient ways to trade consolidations because the triangle pattern generally occurs during ranging periods. Typically, we draw the triangle pattern to highlight these ranging areas.

A trading volume increase signals strong market interest and conviction, validating the breakout direction, whether upward or downward. A high trading volume during breakout suggests that the price movement is supported by a robust number of trades, reducing the likelihood of a false signal. The volume expansion at the breakout point is crucial, as it helps distinguish genuine breakouts from false signals. The pattern is typically seen as a trustworthy indicator of a probable trend reversal or continuation, as it denotes a period of market consolidation before a breakout in one way or the other. The period, the state of the market, and the presence of other technical indicators are some of the variables that affect how reliable a symmetrical triangle pattern is as a trading indicator.

You can also enter a trade on a successful retest, when after a breakout, the price reverts back to the triangle’s trendline to retest that price level. After a retest, the price typically launches back into the direction of the initial breakout. The next step is to wait for a breakout on the symmetrical triangle, and only trade if the price breaks to the upside.

Now, let’s see how you can effectively trade with the Price Channel trading strategy and how to make profits from basically using no technical indicator. This triangle pattern can appear throughout any market, and its popularity is notable with all types of traders who trade in any time frame. It’s at this point we should be alerted to the idea of a symmetrical triangle forming. By marking out major support and resistances, as well as using Fibonacci retracements, we can identify where a consolidation may form. A fast-reacting moving average like the Exponential Moving Average will be smack in the middle of the price action, leading to confusing signals.

1. A rising wedge pattern formed, eventually becoming a large bullish symmetrical triangle breakout.
2. A key factor of success in using this strategy is selecting a moving average that has been shown to be previously respected by the asset.
3. In the EUR/GBP 30-min chart below, we can see how the two converging trend lines are formed following a bearish trend and eventually connect.
4. Symmetrical triangles represent a pause in the prevailing trend as bulls and bears reach an equilibrium.
5. The most common direction of the pattern is a continuation, but that doesn’t rule out the existence of reversal symmetrical triangles.
6. Waiting for a breakout of the trendline is of no use in trading the expanding triangle pattern too.
7. A shorter formation period results in a less accurate symmetrical triangle pattern, with less time for the price to establish a definitive trend.

The EUR/USD broke out of the symmetrical triangle pattern in early December with a significant price move accompanied by a rise in volume. The upward breakout direction led to a sustained bullish trend in the EUR/USD pair, validating the pattern’s predictive capabilities. The symmetrical triangle pattern’s frequent appearance is enhanced by the sensitivity of the Forex market to global economic events and news releases. Traders’ reactions to global economic news, like interest rate changes, contribute to the market entering a phase of indecision. Market indecision is visually represented in the chart pattern by the presence of a symmetrical triangle pattern. The symmetrical triangle formation is a vital Forex chart pattern that enables traders to anticipate price movements when the market resolves its uncertainty.

If this were a battle between the buyers and sellers, then this would be a draw. With CFD trading, it’s crucial to manage your risk carefully, especially when trading in downtrends. Other indicators can also help in estimating the duration of the breakout. The image below shows the placement of both the stop loss how to trade symmetrical triangle and profit target.

What are the advantages of symmetrical triangle pattern in technical analysis?

1. It is a consolidation pattern that signals a potential trend reversal and is formed by two converging trendlines connecting a series of highs and lows.
2. Another method of taking a position is to open a trade when one or two candles close inside the triangle after the third touch.
3. This will help you find consistency in finding chart patterns (not only the symmetrical triangle), and filter out other possible patterns as well.
4. It is just before the apex where an explosive final move will be made to the upside or downside – solidifying the direction of the trend.
5. This measurement forecasts how far the price might move following the breakout.
6. Symmetrical triangles differ from ascending and descending triangles primarily in the direction of their breakout signals.

Once a breakout occurs, traders can estimate the price target by measuring the widest part of the triangle and projecting that distance from the breakout point. This measurement forecasts how far the price might move following the breakout. The pattern itself does not dictate whether the breakout is bullish or bearish. The breakout’s direction is identified, only by examining the price movement after the breakout. This supports a potential short position when the price breaks out of the triangle’s bottom trend line and confirms a bearish trend, If the MACD is moving lower and below the signal line. The strategy to trade the symmetrical triangle pattern will rely on the trader’s personal preferences and risk tolerance, as well as market conditions and other technical aspects.

Flexible Analysis

Symmetrical triangle patterns resolve faster in shorter timeframes, intraday, or daily charts due to quicker price movements. Rapid price fluctuations are amplified on intraday and daily charts, leading to a condensed formation and resolution of the symmetrical triangle pattern. The symmetrical triangle chart pattern lasts for several months on longer timeframes, weekly or monthly charts, because price action is slower, resulting in extended periods of consolidation. The duration it takes for a symmetrical triangle pattern to form is influenced by market volatility in Forex. Volatility reflects market momentum and sentiment, bullish or bearish, and the momentum influences price movements toward the prevailing trend. Higher volatility leads to quicker formation, several days to a few weeks, as prices oscillate rapidly between the converging trend lines.

Open a new position when the price returns to the previous Resistance or Support zone. Just reverse the process and open a Short Position when the price touches the Upper Trendline (slanted downward) for the third time. The Symmetrical Trading PDF guide is an invaluable tool for both novice and seasoned traders. You can easily capitalize on this simple trading pattern by following our step-by-step guide presented throughout this article. Now, we need to define our entry technique, which brings us to the third step of this strategy.

We don’t know what direction the breakout will be, but we do know that the market will most likely break out. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. The Symmetrical Triangle Chart Pattern indicates an ongoing period of price consolidation before the prices break.

Over here, you’ll not be limited by a Symmetrical Triangle pattern’s target profit level. When the price breaks out of the Symmetrical Triangle, it might re-test the previous market structure. Because in the short-term, the buying pressure is exhausted and have no more “energy” to push the price higher. A common mistake traders make is “chasing” the breakout of a Symmetrical Triangle. This means volatility in the market is shrinking and a sign the market is likely to breakout, soon.

How to Do Trading with Trendlines?

Always use stop-losses and consider the overall market conditions before entering a trade. We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform.

What is the Symmetrical Triangle Pattern?

A symmetrical triangle is a chart pattern that occurs in financial markets and is used by traders and investors to identify potential price movements. Do not attempt to catch the falling knife; to guess the direction of a breakout. They are used in conjunction with technical and fundamental analysis for confirmation.