The Powerful Symmetrical Triangle Pattern

The Symmetrical Triangle is a continuation chart pattern like Ascending and Descending Triangle patterns. The Symmetrical Triangle Pattern indicates an ongoing period of price consolidation before the prices break. The bullish symmetrical triangle pattern should be formed in an ongoing uptrend and the prices should breakout from the upper trend line.

Before the breakout, 4 touches to the triangle’s upper and lower borders are the minimum for a valid pattern, more touches are acceptable. Before trading, filtering the best working conditions will increase the probability of winning in a trade. There are few conditions that are the best working conditions how to trade symmetrical triangle for this chart pattern. Open an order just after a valid breakout of trendline forming a Symmetrical Triangle pattern. Upward breakout means buy order and downward breakout means sell order. Another method to avoid false breakout is by looking for a breakout with a big body candlestick.

Volume Patterns

But, if you are looking for an entry point following a symmetrical triangle, jump into the fray at the breakout point. This chart pattern is not mostly to do trading because it offers a very low risk-reward ratio. But it is used with the confluence of any other chart pattern to increase the risk-reward ratio. Use it for identification of market direction like market makers do.

Prices sometimes return to the breakout point of apex on a reaction move before resuming in the direction of the breakout. This return can offer a second chance to participate with a better reward to risk ratio. Potential reward price targets found by measurement and parallel trend line extension are only meant to act as rough guidelines.

Triangle Trading: Example

The symmetrical triangle pattern is different from a descending or ascending triangle pattern as both triangles’ lower and upper trend lines slope towards the centre point. To help you understand how the symmetrical triangle pattern works, below we are going to show you the two types of symmetrical triangle patterns in combination with Fibonacci levels. We’ll also highlight where you need to enter a position and at what price level you should place a stop-loss order and a take-profit target. If you’re looking to trade a symmetrical triangle pattern, there are a few things you need to know. First, it’s important to identify the trend leading up to the formation of the pattern.

The reversal strategy is used when the price reverses at the completion of the pattern and takes a position in the opposite direction. The consolidation strategy is used when the price consolidates within the trendlines and no clear breakout or reversal occurs. This $XLE chart below shows a symmetrical triangle after a 3 month trading range. This triangle could have broken either way but the break out of the apex as the two trend lines met was upwards and followed through for a trend form the break out at $69 to $75. The high of the triangle was near $70 and the low was near $67 so a target of a $3 move would have been a good goal.

Is a symmetrical triangle pattern bullish?

As a result, pre-breakout calculations are limited to pattern length and second stop loss. The buyers may not be able to break through the supply line at first, and they may take a few runs at it before establishing new ground and new highs. The chartist will look for an increase in the trading volume as the key indication that new highs will form. An ascending triangle pattern https://g-markets.net/ will take about four weeks or so to form and will not likely last more than 90 days. However, unlike other patterns where the breakout rate is fixed, a bullish symmetrical triangle breakout rate is variable, depending on the time of the breakout. In technical analysis, it’s one of the most popular triangle price formations that falls under the category of continuation patterns.

HowToTrade.com helps traders of all levels learn how to trade the financial markets. In a downtrend, price action finds the first resistance (1), which will be the lowest low in the pattern. In an uptrend, price action finds the first resistance (1), which will be the highest high in the pattern. Now mirror that measured height above or below the breakout point. We need to work with the triangle parameters to calculate the triangle pattern height.

How to Identify and Use the Symmetrical Triangle Candlestick Pattern in Forex Trading?

The more you move the stop to the left, the bigger the distance is between the stop and the entry price. 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.

• The reason for this is that real breakouts usually happen during high trading volumes and high volatility.
• These trendlines will form the sides of the triangle, and the point where they converge is called the apex.
• Identifying a valid breakout of chart patterns is very important because market makers will try their best to capture the retail traders with simple false breakout strategies.
• It will draw real-time zones that show you where the price is likely to test in the future.

Because below 15-minute timeframe, it will become difficult to identify false breakouts due to the high frequency of trading in lower timeframes. You will benefit greatly by waiting for the breakout candle to close above the pattern. This will prevent you from taking unnecessary risk and you’ll avoid many of the false breakouts. The Symmetrical trading strategy will help you increase your account balance quite rapidly. You simply have to employ this step-by-step guide on triangle trading to make sure you’re correctly reading the information given by the classical Symmetrical Triangle Geometry Pattern.

What is the trading strategy associated with a symmetrical triangle pattern

This option gives you a better entry as you can use the opportunity to enter the trade exactly at the retest. On the other hand, its limitation lies in the fact that you may never get the opportunity to enter a trade as the retest isn’t guaranteed to happen. The advantage of the first option is that you can’t miss out on a trade, as you are in as soon as the candle closes above/below the trend line.

• This is the minimum target we should pursue when trading the pattern.
• In technical analysis, a symmetrical triangle is a tool that traders use to forecast a price direction.
• As a last piece of advice before ending this article, we just once more wanted to stress the importance of always validating your strategies and setups before going live.
• So a breakout with large price momentum indicates a valid breakout.
• If a price reversal isn’t confirmed, there is a lower chance of a fakeout.
• Use it for identification of market direction like market makers do.

You should always know the amount you are willing to risk before placing any trade. If sometimes you need to risk more than you set into your trading plan, simply do not take the trade and move forward to a better one. HowToTrade.com takes no responsibility for loss incurred as a result of the content provided inside our Trading Room.