Chart pattern (part 3)- Triangle patterns
Technical analysis

Chart Patterns (Part 3) – Triangle Patterns

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Triangle patterns are basically continuation patterns and are very much reliable to trade.

There are three types of triangle patterns

1. Ascending triangle pattern – This type of triangle pattern forms after an uptrend. After an up move, a pause occurs when price moves in between two lines. First upper horizontal line forms a good resistance for the price; it consists of almost equal three highs or peaks. The second lower ascending trend line forms good support for the price; it consists of three lows or troughs in which successive lows should be higher than the previous ones, which confirms the ascending nature of trend line in an uptrend. The pattern completes when the price breaks the upper horizontal line or the resistance line with heavy volume. This confirms the continuity of uptrend.

ascending triangle pattern

(Chart courtesy of StockCharts.com)

2. Descending triangle pattern – This type of triangle forms after a downtrend. After a down move, a pause occurs when price moves in between two lines. First upper descending trend line which forms a good resistance for the price; it consists of three highs in which successive highs should be lower than the previous ones which confirm the descending nature of trend line in a downtrend. The second lower horizontal line forms good support for the price; it consists of three almost equal lows or troughs. The pattern completes when the price breaks the lower horizontal line or support line with heavy volume. This confirms the continuity of downtrend. 

Descending triangle pattern

(Chart courtesy of StockCharts.com)

3. Symmetrical triangle pattern – This triangle is different from the previous two, as it is considered to be a consolidation pattern which may either leads to the continuation of the ongoing trend or trend reversal after its completion. The price in this pattern moves in between two trend lines. The first upper descending trend line is the resistance line with at least three highs or peaks in which successive highs or peaks should be lower than the previous ones. The second lower ascending trend line is the support line with at least three lows or troughs in which successive lows or troughs should be higher than the previous ones. Price bounces in between these two lines with low volume moving towards the apex of the triangle, which is the point where the highs and lows converge and breakout occurs in one direction either up or down with heavy volume. This pattern is considered to be a strong signal of future trend direction.

Symmetrical triangle pattern

(Chart courtesy of StockCharts.com)

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