Where to find the Triangles at Christmas?

When the price loses momentum for some reason and enters a stabilization phase, there is a possibility of forming a symmetrical triangle or coil. A Symmetrical Triangle pattern is a type of consolidation pattern and occurs when the price loses its momentum. In this case, buyers and sellers hope to continue their process.

Let’s look closer at the symmetrical triangle pattern: When the price goes down, buyers start buying and making higher bottoms, and when the price goes up, sellers start selling and making lower tops. A support trend line with a positive slope forms at the bottom, and a resistance trend line with a negative slope forms at the top of the pattern.

The Symmetrical Triangle is often a continuation pattern, but some analysts consider it a reversal. I advise you to see it as a continuing pattern. Of course, if the pattern gives you a confirmation to start a reversal trend, you should consider it a reversal pattern.

A Symmetrical Triangle occurs when the price forms a top and a bottom after an upward trend and then forms lower tops and higher bottoms.

In this case, if we draw a resistance trend line and a support trend line, it will take the form of a triangle, and they will intersect at a point called the apex of the triangle; after forming these four pivots, we can say that a symmetrical triangle forms.

The apex of the triangle should be at a price between the highest top and the lowest bottom and cannot be at the same price as them: if it is, you need to forget this pattern because it will no longer be a Symmetrical Triangle.

To form a triangle, we need at least four significant pivots; in simple language, we need at least two tops and two bottoms. The number of tops and bottoms can be more, but we need four pivots at least. A symmetrical triangle must start from the highest top in an upward trend. This pattern forms in one-sided and two-sided markets, and we can count on it.

Trade on the Symmetrical Triangle in Upward Trends

When the pattern completes, and at least four pivots are approved, we have to wait for the pattern to give us the entry confirmation. The number of pivots may increase, so we should not enter the position until we see the confirmation. But what is the confirmation to enter the position in this pattern? Trend line breakout.

When the resistance trend line breaks, we can open a long position and make a good profit; but be sure to see a true breakout first. When the breakout candle closes above the trend line, enter the position and put the stop-loss below the last bottom or below the breakout candle.

You can use the following methods to select your take-profit point:

1 – Choose the distance between the first top and the first bottom to set your take-profit level (see the X lines on the above chart). You get a higher risk-to-reward ratio this way.

2 – Draw a line from the first top parallel to the support trend line and continue (see chart below).

If you look carefully at this chart, the price has entered an upward channel in this case.

In the rules related to the price channel, we know that the upper line of the channel is a resistance trend line. You can withdraw a part of your profit in this area.

The Symmetrical Triangle is a continuation pattern, and the price can experience higher prices after it. It is not bad to get this profit. So you can close your position in two steps:

1 – After hitting this parallel line

2 – Twice this size, or at the next resistance zone

In the picture below, you can check one of my positions on the chart EUR/USD In the 5-minute time frame.

So that you fully understand, I will explain my position to you. When the price formed a Symmetrical Triangle, I waited for confirmation to enter a long position. When the breakout candle closed above the resistance trend line, I entered at 1.00118 USD.

I put my stop-loss under the breakout candle at 1.00080 USD for a higher risk-to-reward ratio. And my take-profit level was equal to the distance between the first top and the first bottom, and I placed it at 1.00288 USD. But I didn’t close the whole position; I withdrew just half of my profit at this point ($7,200).

The upward trend had a lot of momentum, so I waited to get more profit from this position and withdrew the other half at a higher price ($6,800). In this position, I made a profit of $14,000 in 2 hours.

 Symmetrical Triangle Pattern as a Reversal Pattern in Upward Trends

Sometimes, the price breaks the support trend line and falls, which we should treat as a reversal pattern or a Symmetrical Triangle in the downward trend and open a short position on it. The chart below shows that the price has dropped after breaking the support trend line.

In this case, you can profit from this reversal pattern. Just enter a short position below the breakout candle and place the stop-loss above the last top. Your take-profit level equals the distance between the first top and the first bottom. You can also use the second way (parallel line) to determine the take-profit.

When the price gets tired in a downtrend, it enters a converging trend of lower tops and higher bottoms. Buyers and sellers test their strengths in this area. Sellers insist on continuing the trend and preventing the creation of a higher top, and buyers believe in the formation of a new upward movement and make bottoms at a higher price every time.

But most of the time, the sellers are correct, and the price continues its downward trend. It is better to be with the sellers in this battle. Don’t forget that the trend is our good friend, and we should always be with the movement.

To form a Symmetrical Triangle pattern in a downward trend, we need at least four significant pivots, which include two bottoms and two tops. After forming the first bottom and then the first top, the price starts making higher bottoms and lower tops.

The price enters a converging channel, i.e., a support trend line with a positive slope and a resistance trend line with a negative slope. When the second top forms and the price then returns to the support trend line, the pattern completes, and we can call it a Symmetrical Triangle.

If we continue the two trend lines, they will meet at one point, and a triangle shape will appear. This point is called the apex of the triangle, and it is essential for you, and I will tell you how it can help.

Trade on the Symmetrical Triangle in Downward Trends

You can enter a short position when the price breaks the support trend line. But please make sure that the breakout is valid and does not fail. The breakout candle must close below the support trend line. Based on my stock market experience for years, I want to give you some helpful advice.

You can wait three days for more certainty if you work in the stock market and daily time frame. Because in the stock market, while you cannot place a short position; you can still use this pattern as an exit signal. In other words, you sell the stock you have bought at lower prices because you know the price will fall after the formation of this pattern.

At some point during those three days, the price should be lower than the support trend line. If you are trading in two-sided markets like cryptocurrency or forex, you can place the short position on the chart.

After the breakout candle forms, you can enter a short position below the candle and place the stop-loss above the last top. Also, you can place your stop-loss above the breakout candle for a higher risk-reward ratio.

There are two ways to choose your take profit:

1 – Choose the distance between the first bottom and the first top as the take-profit size (you can earn more profit this way).

2 – Draw a line from the first bottom, parallel to the resistance line, and continue. You can see a descending price channel at this point.

When the price hits this parallel line, you can withdraw part of your market profit and withdraw the other part at the second target.

I will show my short position on BTC/USDT in the 1-hour time frame and explain it so that you can learn better, my friend.

When the Symmetrical Triangle pattern formed and the support trendline broke, I waited for the breakout candle to close below the trendline. After closing the breakout candle, I entered a short position at 21339.22 USDT and placed the stop-loss above the breakout candle at 21651.50 USDT.

I chose the distance between the first bottom and first top for the first profit target and placed my first take-profit trigger at 20351.99 USDT. I withdrew almost half of my profit ($4,000) from the market at this point. I closed the other position at a lower price, i.e., twice the first target. Now, instead of $4,000, I had a profit of $8,000.

My total profit was $4000+$8000 = $12,000. I made a huge profit in this position and spent it on a weekend vacation with my family. A significant profit in a short time, I wish such positions for you, too.

 Symmetrical Triangle Pattern as a Reversal Pattern in Downtrends

After the formation of the Symmetrical Triangle pattern, if the price breaks the resistance trend line and rises, the Symmetrical Triangle pattern becomes a reversal pattern and causes a strong reverse. In this case, we can enter a long position.

After closing the breakout candle, you can enter the position and place the stop-loss below the last bottom. Your take-profit level should equal the distance between the first bottom and the first top.

The volume decreases during the formation of all stabilization patterns. When the pattern is complete, and the price tries to break the trend line, the market volume increases suddenly. We call it the lull before the storm; the volume becomes less and less, and a volume storm suddenly arises at the breakout time.

In upward trends, the market volume is a more critical factor than in downward trends because we need a high volume of trades for an upward trend. To better identify the price’s direction, we can check the volume for each of the ascending and descending waves.

If the volume increases during ascending trends and decreases during descending trends, we conclude that the market is likely to enter an overall upward trend. If the volume increases during downward trends and decreases during upward trends, on the other hand, we recognize that the market may well be about to enter an overall downward trend.

This subject is an unwritten rule, and you will not see it anywhere else. It is the result of my personal experiences, and I have used it a lot. It is one of the essential confirmations of my analysis.

Draw a horizontal line from the apex of the triangle to divide the triangle pattern into two parts, upper and lower. Compare the number of candles above and below this line. If the number of candles above the line outnumbers those below it, the probability of an upward trend forming is higher.

And If the number of candles below the line is greater, the probability of a downward trend forming would be higher. Usually, 45 to 60 candles are needed to form the Symmetrical Triangle pattern. If the number of candles is less or more than this number, you should doubt the validity of the pattern. Practice this method and be sure it will be beneficial and profitable.

Calculate the horizontal distance between the apex and the first top/bottom. Divide that distance into four parts and then divide it into three parts. Do not forget to start from the apex.

Pay attention to the orange zone or the size difference between a quarter and a third of the distance. Ideally, if the price breaks the trend line in this zone, it will continue its trend. But if the price passes the orange zone, the validity of the pattern will decrease, and you should not take a risk on it.

Regarding the breakout in this pattern, the Fibonacci rules work as accurately as possible. In general, the breakout of the trend line is between 61.8% and 78.6% of the time. The Interval of the triangle. In the upward trends, we should consider the first top as representing 0% and the apex as 100%.

Meanwhile, in downward trends, we consider the first bottom as 0% and the apex as 100%. Of course, this Fibonacci zone is almost identical to the orange zone shown in the chart above. This similarity between Fibonacci and scientists’ research is fascinating.

If you trade in the weekly time frame, here is a good example: If the distance between the first pivot (top or bottom) and the apex is twenty weeks, then ideally, the price should break the trend line in about the 14th week and continue the trend.

After much research, he discovered that: For the Symmetrical Triangle in the upward trend, the price target (take-profit) equals 66% of the distance between the first top and the first bottom.

In a downward trend, the price target (take-profit) for the Symmetrical Triangle pattern is 48% of the distance between the first top and the first bottom.

• According to his research on the Symmetrical Triangle pattern, in 84% of cases, the pattern is a continuation pattern.

• The formation of a Symmetrical Triangle in the stock market and the daily time frame lasts from three weeks to 3 months.

If its formation takes less than three weeks, we call it a pennant pattern, which I will fully explain later.

Let me discuss Elliott Waves with you. Of course, you may not be familiar with this theory. I will talk about it more fully in the future, but since the Symmetrical Triangle is a basic pattern in Elliott Waves, I will explain them a little here. We can see the contracting triangle in Elliott Waves in waves B and 4, and it only has the role of a continuation pattern. We cannot see it in wave 2.

A Symmetrical Triangle or contracting triangle in Elliott Waves consists of five waves, A, B, C, D, and E. Each wave consists of three sub-waves because all the waves are corrections, and the market has entered a correction zone. The size of wave A is the largest, and then B, C, and D waves are smaller waves in staggered order. The E wave is the slightest wave.

Conclusion

In this article, you have learned an essential part of classic patterns. The Triangle pattern is in many forms in the chart, and I will teach you all kinds. It will help if you try to explore and analyze the chart.

You should live in the chart to face its beautiful and exciting challenges. Try to discover new patterns and expand the science of technical analysis. Capital management is the main discussion and one of the essential profitability factors; try to learn it well.

Thank you for listening to me and giving me your time. I hope you trust my advice and practice on the chart. Stay tuned for my following articles on the infinite science of technical analysis.