Get started

Triangle

Best Price Action Pattern For GOLD Trend Following Trading This bullish pattern is very powerful . Being spotted on a daily/4h/1h, any time frame, it will help you to accurately predict a strong bullish movement on Gold . In this article, I will teach you to identify a buying volumes accumulation on Gold chart and as a bonus, I will show you how I predicted a recent bullish rally with this price action pattern. The initial point of this pattern will be a completion point of a strong bullish impulse. At some moment, the price finds a strong horizontal resistance, stops growing and retraces. The second point of the pattern will be a completion of a retracement. It should strictly be a higher low - it should be higher than the low of an initial bullish impulse. After a retracement, the price should return to a horizontal resistance and set an equal high , that will be the third point of the pattern. Then, the price should retrace AT LEAST one more time from a horizontal resistance and set a new higher low. After that, the price should set one more equal high. 3 equal highs and 2 higher lows will compose a bullish accumulation pattern. Please, note, that the price may easily set more equal highs and more consequent new higher lows and keep the pattern valid. Above is the example of a bullish accumulation pattern on Gold on an hourly time frame. The price set 3 equal highs and 3 consequent higher lows. This pattern will signify the weakness of sellers and the accumulation of buying volumes. The point is that each consequent bearish price movement from a resistance is weaker than a previous one. It means that fewer sellers are selling from the resistance and more buyers start buying, not letting sellers go lower. In our example, we can clearly see the consequent weakening, bearish price movements. This pattern indicates a highly probable breakout attempt of the resistance. A candle close above that provides a strong bullish signal. The broken resistance will turn into support and will provide a safe point to buy the market from. In our example, the market broke the underlined horizontal resistance and closed above that. It indicates the completion of a bullish accumulation and a highly probable bullish trend continuation. You can see that Gold retested a broken structure and then a strong bullish wave initiated. In a strong bullish market that we currently contemplation on Gold, this bullish pattern will provide a lot of profitable trading opportunities. No matter whether you are scalping, day trading or swing trading Gold, this bullish accumulation pattern will help you to predict long-term, mid-term and short-term bullish movements. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
1
The Symmetrical Triangle: Real Success Rates + Breakout.The Symmetrical Triangle: Real Success Rates + Breakout. The symmetrical triangle is an important chart pattern in technical analysis, deserving special attention from professional traders. This formation is characterized by a convergence of prices between two trendlines, one descending and the other ascending, creating a consolidation zone where indecision between buyers and sellers is palpable. Statistical Analysis Empirical data reveals that the success rate of the symmetrical triangle for a trend continuation is approximately 54%. This percentage, although higher than 50%, underlines the importance of a cautious approach and rigorous risk management in using this pattern. Breakout Point The breakout of the symmetrical triangle usually occurs when the price has traveled approximately 75% of the distance to the apex. This point is crucial for traders, as it often represents the moment when volatility increases and a new trend can be established. Risks and False Exits It is essential to note that the symmetrical triangle has a relatively high rate of false exits. Statistics indicate that approximately 13% of cases in a bear market can result in a false exit to the bottom. This phenomenon underlines the need for additional confirmation before entering a position. Strategy of use To effectively exploit the symmetrical triangle, professional traders must: -Identify the formation accurately. -Wait for the breakout near the point of convergence of the trendlines. -Confirm the breakout with other technical indicators or an increase in volume. -Put in place strict risk management to protect against false exits. In conclusion, the symmetrical triangle, although being a valuable tool in the trader's arsenal, requires a methodical approach and a thorough understanding of its characteristics to be used effectively in a trading strategy.
BINANCE:BTCUSDEducation
by Le-Loup-de-Zurich
2
Actual Success Rates of Ascending and Descending TrianglesActual Success Rates of Ascending and Descending Triangles Here is an analysis of the actual success rates of ascending and descending triangles in trading, based on the information provided: Success Rates Ascending and descending triangles generally have fairly high success rates as continuation patterns: -The ascending triangle has a success rate of approximately 72.77%. -The descending triangle has a slightly higher success rate of 72.93%. These numbers come from a study that tested over 200,000 price patterns over a 10-year period. Factors Influencing Success Several factors can influence the success rate of these patterns: -The trader's ability to execute the strategy correctly -Market conditions at the time the triangle formed -Market liquidity -Overall market sentiment Important Points to Consider -Triangles are considered reliable continuation patterns, especially in trending markets. -The ascending triangle in an uptrend is statistically more reliable than the descending triangle. -To validate the pattern, the price must touch at least twice each of the upper and lower lines. -An increase in volume during the breakout is an important confirmation sign. Strategies to improve the chances of success -Wait for the triangle to fully form before entering a position1. -Confirm the breakout with a close above/below the resistance/support level. -Use additional technical indicators to confirm the signal. -Pay attention to the volume, which should increase during the breakout. Conclusion Although ascending and descending triangles have relatively high success rates, it is important to use them in conjunction with other technical analysis tools and to take into account the overall market context to maximize the chances of success.
COINBASE:BTCUSDEducation
by Le-Loup-de-Zurich
Profitable Triangle Trading Strategy Explained Descending triangle formation is a classic reversal pattern . It signifies the weakness of buyers in a bullish trend and bearish accumulation . In this article, I will teach you how to trade descending triangle pattern. I will explain how to identify the pattern properly and share my trading strategy. ⭐️ The pattern has a very peculiar price action structure : 1. Trading in a bullish trend, the price sets a higher high and retraces setting a higher low . 2. Then the market starts growing again but does not manage to set a new high, setting a lower high instead. 3. Then the price drops again perfectly respecting the level of the last higher low, setting an equal low . 4. After that, one more bullish movement and one more consequent lower high , bearish move, and equal low . Based on the last three highs , a trend line can be drawn. Based on the equal lows , a horizontal neckline is spotted. ❗What is peculiar about such price action is the fact that a set of lower highs signifies a weakening bullish momentum : fewer and fewer buyers are willing to buy from horizontal support based on equal lows. 🔔 Such price action is called a bearish accumulation . Once the pattern is formed it is still not a trend reversal signal though. Remember that the price may set many lower highs and equal lows within the pattern. The trigger that is applied to confirm a trend reversal is a bearish breakout of the neckline of the pattern. 📉Then a short position can be opened. For conservative trading, a retest entry is suggested. Safest stop is lying at least above the level of the last lower high. However, in case the levels of the lower highs are almost equal it is highly recommendable to set a stop loss above them all. 🎯For targets look for the closest strong structure support. Below, you can see the example of a descending triangle trade that I took on NZDCAD pair. After I spotted the formation of the pattern, I was patiently waiting for a breakout of its neckline. After a breakout, I set a sell limit order on a retest. Stop loss above the last lower high. TP - the closest key support. 90 pips of pure profit made. Learn to identify and trade descending triangle. It is one of the most accurate price action patterns every trader should know.
OANDA:XAUUSDEducation
by VasilyTrader
1
MASTERING SYMMETRICAL TRIANGLES: A GUIDE FOR TRADERS👀See the first 3 items on the chart👆 🔰Other details: ⭐D: ⭐E: ⭐F: ⭐G: 🔰Additional Considerations for Triangles: ⭐H: Number of Points: To construct a triangle, we need at least two HIGHS and two LOWS. Occasionally, triangles are formed using six points instead of the usual four. ⭐I: Validity Criterion: The BREAKOUT point (exit point) of a triangle should not be too close to the intersection of its upper and lower sides; otherwise, the triangle loses its validity.
Education
by Eldorado_Land
1
Trading Diverging Chart PatternsContinuing our discussion on trading chart patterns, this is our next tutorial after Trading Converging Chart Patterns This tutorial is based on our earlier articles on pattern identification and classification. Algorithmic Identification of Chart Patterns Flag and Pennant Chart Patterns In this tutorial, we concentrate on diverging patterns and how to define rules to trade them systematically. The diverging patterns discussed in this tutorial are: Rising Wedge (Diverging Type) Falling Wedge (Diverging Type) Diverging Triangle Rising Triangle (Diverging Type) Falling Triangle (Diverging Type) 🎲 Historical Bias and General Perception Before we look into our method of systematic trading of patterns, let's have a glance at the general bias of trading diverging patterns. 🟡 The Dynamics of Diverging Wedge Patterns Diverging Wedge patterns are typically indicative of the Elliott Wave Structure's diagonal waves, potentially marking the ending diagonal waves. That means that the patterns may signal the ending of a long term trend. Hence, the diverging rising wedge is considered as bearish, whereas the diverging falling wedge is considered as bullish when it falls under Wave 5 of an impulse or Wave C of a zigzag or flat. For an in-depth exploration, refer to our detailed analysis in Decoding Wedge Patterns Both rising wedge and falling wedge of expanding type offers lower risk reward (High risk and low reward) in short term as the expanding nature of the pattern will lead to wider stop loss. 🎯 Rising Wedge (Expanding Type) Expanding Rising Wedge pattern is historically viewed with bearish bias. 🎯 Falling Wedge (Expanding Type) Expanding Falling Wedge pattern is historically viewed with bullish bias. 🟡 The Dynamics of Diverging Triangle Patterns Diverging pattern in general means increased volatility. Increased volatility during the strong trends also mean reducing confidence that may signal reversal. 🎲 Alternate Approach towards trading diverging patterns Lack of back testing data combined with subjectivity in Elliott wave interpretation and pattern interpretation makes it difficult to rely on the traditional approach. The alternative method involves treating all expanding patterns equally and define a systematic trading approach. This involves. When the pattern is formed, define a breakout zone. One side of the breakout zone will act as breakout point and the other side will act as reversal point. Depending on the breakout or reversal, trade direction is identified. Define the rules for entry, stop, target and invalidation range for both directions. This can be based on specific fib ratio based on pattern size. Backtest and Forward test the strategy and collect data with respect to win ratio, risk reward and profit factor to understand the profitability of patterns and the methodology. Breaking it down further. 🟡 Defining The Pattern Trade Conditions Base can be calculated in the following ways. Distance between max and min points of the pattern. (Vertical size of the pattern) Last zigzag swing of the pattern (This is generally the largest zigzag swing of the pattern due to its expanding nature) This Base is used for calculation of other criteria. 🎯 Breakout Zone - Entry Points Breakout zone can be calculated based on the following. Long Entry (top) = Last Pivot + Base * (Entry Ratio) Short Entry (bottom) = Last Pivot - Base * (Entry Ratio) If the direction of the last zigzag swing is downwards, then top will form the reversal confirmation and bottom will form the breakout confirmation. Similarly, if the direction of the last zigzag swing is upwards, then top will become the breakout confirmation point and bottom will act as reversal confirmation point. 🎯 Stops Long entry can act as stop for short and vice versa. However, we can also apply different rule for calculation of stop - this includes using different fib ratio for stop calculation in the reverse direction. Example. Long Stop = Last Pivot - Base * (Stop Ratio) Short Stop = Last Pivot + Base * (Entry Ratio) 🎯 Invalidation Invalidation price is a level where the trade direction for a particular pattern needs to be ignored or invalidated. Invalidation price can be calculated based on specific fib ratios. It is recommended to use wider invalidation range. This is to protect ignoring the potential trades due to volatility. Long Invalidation Price = Last Pivot - Base * (Invalidation Ratio) Short Invalidation Price = Last Pivot + Base * (Invalidation Ratio) 🎯 Targets Targets can either be set based on fib ratios, as explained for other parameters. However, the better way to set targets is based on expected risk reward. Target Price = Entry + (Entry-Stop) X Risk Reward 🟡 Back Test and Forward Test and Measure the Profit Factor It is important to perform sufficient testing to understand the profitability of the strategy before using them on the live trades. Use multiple timeframes and symbols to perform a series of back tests and forward tests, and collect as much data as possible on the historical outcomes of the strategy. Profit Factor of the strategy can be calculated by using a simple formula Profit Factor = (Wins/Losses) X Risk Reward 🟡 Use Filters and Different Combinations Filters will help us in filtering out noise and trade only the selective patterns. The filters can include a simple logic such as trade long only if price is above 200 SMA and trade short only if price is below 200 SMA. Or it can be as complex as looking into the divergence signals or other complex variables.
Editors' picks
NASDAQ:TSLAEducation
by Trendoscope
7
Falling wedge aka continued patternThe formation of any triangle is a direction indication relevant to where you find it as some can be a warning if reversal. The market moves in grids(zones). Relevant to sentiment of traders and news. It always moves in wave 🌊 and in those waves we have patterns like ABCD resumption. Failure swings💰👃, 🐂 bullish breakouts, traps ECT. The thing is impulsive moves is where you want to be even though it may be a correction. The thing with that is only with rising wedge patterns that are confirmed by long wicked 🔨 that indicate a move to the downside and this is like I said the day being under pressure from all the wicks formed by sellers and buyers showing no strength or news keeping it suppressed. This is your classic break and retest strategy. Like I said the money is in the trend and the impulses is always where you want to be mostly breakouts from levels continuing with the direction of the day - down to MN if you that good. The SL of the pattern invalidates the idea and if any near term trails can be hit we get even better low entries. Remember your idea is only invalid when it doesn't hold weekly and MN TF key levels. This can also be seen by the RSI as it shows the strength of candlesticks relevant to highs and lows of the sessions. Risk management is key especially if you have an account from 2$-100$. We only increase size when the accounts over 250-500$ which will give you a chance at playing 0.05 not saying it isn't possible at 70$ but you risk blowing it faster than a single 0.01 that just loses 1-5$ depending how the setup looks. If you feel like it won't work the SL should be 100 pips of not 10-50 pips which is 0.30cents to 0.72c$ Entry will be a breakout. And anything playing and rejected in that area can be waited for a signal to go long. Obviously if you don't have money to blow on risk like a 0.01 and lose 20$ in one go than don't. You risk smaller that's why we wait for lows or zone to enter example 0.01 and a lose of 2-4$. You can always trade gold with a small amount and turn it to a lot thing is it will kick you out if you dont take profits or secure them in positive SL of 1_5$ The TP is usually the inside of the pattern or the impulse before. Remember wave move in 5-1-2-3-4 and five. 2-correction can't be a triangle so it's usually rectangle 4- correction Triangle 📐 and it moves up 3-the largest impulse bigger than wave1-&5, but never small than 1 1impulse can be an extension (1-2-3-4-5 wave in wave one ), 5 can be the same as ones length Now the thing about waves is the counting that gets difficult especially if the complex corrections. Therefore for m30, you play the day and if it doesn't hit one target or the second you positive SL and wait for better entries. Gold can make you bank if you play it right, I mean risk manage your account to small losses and close large ones you can always enter again another place a ladder positions. Please like if this education is helpful 🙏
FX_IDC:XAUUSDEducation
by GCGoldenCircle
2
Triangle Pattern Trading: A Trap for NewbiesThe triangle pattern is a popular chart pattern that is often used by technical analysts to identify potential breakout opportunities. However, traders should be aware that the triangle pattern can also be a trap for unsuspecting beginners. Why the Triangle Pattern is a Trap One of the reasons why the triangle pattern can be a trap is that it is a very subjective pattern. There are no hard and fast rules for identifying a triangle pattern, and what one trader might identify as a triangle pattern, another trader might not. Another reason why the triangle pattern can be a trap is that it is a very common pattern. This means that there are many opportunities for traders to trade this pattern, which can lead to overtrading. Overtrading is a common problem for beginners, and it can lead to significant losses. Smart Money Traders and the Triangle Pattern Smart money traders are aware of the fact that the triangle pattern can be a trap for beginners. They will often use this pattern to their advantage by creating false breakouts and trapping beginner traders into losing positions. Here are four examples of how smart money traders use the triangle pattern to trap beginners: NEO: formed a bullish triangle pattern. However, the price broke out of the pattern in a fake breakout and then reversed sharply, trapping many beginner traders who were buying the breakout. RVN: Rformed a symmetrical triangle pattern. The price broke out of the pattern in a fake breakout and then reversed sharply, trapping many beginner traders who were buying the breakout. DYDX: formed a descending triangle pattern. The price broke out of the pattern in a fake breakout and then reversed sharply, trapping many beginner traders who were buying the breakout. TRX: formed a bullish triangle pattern. However, the price broke out of the pattern in a fake breakout and then reversed sharply, trapping many beginner traders who were buying the breakout. How to Avoid the Triangle Pattern Trap There are a few things that traders can do to avoid the triangle pattern trap: Be aware of the subjectivity of the pattern. There are no hard and fast rules for identifying a triangle pattern, so traders should be careful not to get too caught up in trying to identify this pattern. Don't overtrade. The triangle pattern is a very common pattern, which means that there are many opportunities to trade this pattern. Traders should be careful not to overtrade this pattern, as this can lead to significant losses. Be aware of smart money traders. Smart money traders will often use the triangle pattern to their advantage by creating false breakouts and trapping beginner traders into losing positions. Traders should be aware of this and be careful not to fall for these traps. Conclusion The triangle pattern can be a useful tool for identifying potential breakout opportunities. However, traders should be aware that this pattern can also be a trap. By understanding the reasons why the triangle pattern can be a trap, and by taking steps to avoid these traps, traders can protect themselves from significant losses.
Education
by Yaroslav_Krasko
4
Trading Converging Chart PatternsWe discussed identification and classification of different chart patterns and chart pattern extensions in our previous posts. Algorithmic Identification of Chart Patterns Flag and Pennant Chart Patterns In this installment, we shift our focus towards the practical trading strategies applicable to a select group of these patterns. Acknowledging that a universal trading rule cannot apply to all patterns, we narrow our examination to those of the converging variety. We will specifically address the following converging patterns: Rising Wedge (Converging Type) Falling Wedge (Converging Type) Converging Triangle Rising Triangle (Converging Type) Falling Triangle (Converging Type) This selection will guide our discussion on how to approach these patterns from a trading perspective. 🎲 Historical Bias and General Perception Each pattern we've discussed carries a historical sentiment that is widely regarded as a guideline for trading. Before we delve into our specific trading strategies, it's crucial to understand these historical sentiments and the general market interpretations associated with them. 🟡 The Dynamics of Contracting Wedge Patterns Contracting Wedge patterns are typically indicative of the Elliott Wave Structure's diagonal waves, potentially marking either the beginning or conclusion of these waves. A contracting wedge within a leading diagonal may experience a brief retracement before the trend resumes. Conversely, if found in an ending diagonal, it could signal the termination of wave 5 or C, possibly hinting at a significant trend reversal. The prevailing view suggests that these patterns usually precede a short-term directional shift: Rising Wedges are seen as bearish signals, while Falling Wedges are interpreted as bullish. It's essential to consider the trend prior to the formation of these patterns, as it significantly aids in determining their context within the Elliott Wave cycles, specifically identifying them as part of waves 1, A, 5, or C. For an in-depth exploration, refer to our detailed analysis in Decoding Wedge Patterns 🎯 Rising Wedge (Converging Type) The Rising Wedge pattern, historically viewed with a bearish bias, suggests that a downward trend is more likely upon a breakout below its lower trend line. This perception positions the pattern as a signal for traders to consider bearish positions once the price breaks through this critical support. 🎯 Falling Wedge (Converging Type) The Falling Wedge pattern is traditionally seen through a bullish lens, indicating potential upward momentum when the price surpasses its upper trend line. This established viewpoint suggests initiating long positions as a strategic response to such a breakout, aligning with the pattern's optimistic forecast. 🟡 Contracting Triangle Patterns Contracting Triangles, encompassing Converging, Ascending, and Descending Triangles, are particularly noteworthy when they appear as part of the Elliott Wave's B or 2 waves. These patterns typically signal a continuation of the pre-existing trend that preceded the triangle's formation. This principle also underpins the Pennant Pattern, which emerges following an impulse wave, indicating a pause before the trend's resumption. 🎲 Alternate Way of Looking into Converging Patterns Main issue with historical perception are: There is no clear back testing data to prove whether the general perception is correct or more profitable. Elliott Waves concepts are very much subjective and can be often difficult for beginners and misleading even for experts. So, the alternative way is to treat all the converging patterns equally and devise a method to trade using a universal way. This allows us to back test our thesis and be definitive about the profitability of these patterns. Here are our simple steps to devise and test a converging pattern based strategy. Consider all converging patterns as bidirectional. Meaning, they can be traded on either side. Thus chose to trade based on the breakout. If the price beaks up, then trade long and if the price breaks down, then trade short. For each direction, define criteria for entry, stop, target prices and also an invalidation price at which the trade is ignored even without entry. Backtest and Forward test the strategy and collect data with respect to win ratio, risk reward and profit factor to understand the profitability of patterns and the methodology. Now, let's break it further down. 🟡 Defining The Pattern Trade Conditions Measure the ending distance between the trend line pairs and set breakout points above and beyond the convergence zone. 🎯 Entry Points - These can be formed on either side of the convergence zone. Adding a small buffer on top of the convergence zone is ideal for setting the entry points of converging patterns. Formula for Entry can be: Long Entry Price = Top + (Top - Bottom) X Entry Ratio Short Entry Price = Bottom - (Top-Bottom) X Entry Ratio Whereas Top refers to the upper side of the convergence zone and bottom refers to the lower side of the convergence zone. Entry Ratio is the buffer ratio to apply on top of the convergence zone to get entry points. 🎯 Stop Price - Long entry can act as stop for short orders and the short entry can act as stop price for long orders. However, this is not mandatory and different logic for stops can be applied for both sides. Formula for Stop Can be Long Stop Price = Bottom - (Top - Bottom) X Stop Ratio Short Stop Price = Top + (Top - Bottom) X Stop Ratio 🎯 Target Price - It is always good to set targets based on desired risk reward ratio. That means, the target should always depend on the distance between entry and stop price. The general formula for Target can be: Target Price = Entry + (Entry-Stop) X Risk Reward 🎯 Invalidation Price - Invalidation price is a level where the trade direction for a particular pattern needs to be ignored or invalidated. This price need to be beyond stop price. In general, trade is closed when a pattern hits invalidation price. Formula for Invalidation price is the same as that of Stop Price, but Invalidation Ratio is more than that of Stop Ratio Long Invalidation Price = Bottom - (Top - Bottom) X Invalidation Ratio Short Invalidation Price = Top + (Top - Bottom) X Invalidation Ratio 🟡 Back Test and Forward Test and Measure the Profit Factor It is important to perform sufficient testing to understand the profitability of the strategy before using them on the live trades. Use multiple timeframes and symbols to perform a series of back tests and forward tests, and collect as much data as possible on the historical outcomes of the strategy. Profit Factor of the strategy can be calculated by using a simple formula Profit Factor = (Wins/Losses) X Risk Reward 🟡 Use Filters and Different Combinations Filters will help us in filtering out noise and trade only the selective patterns. The filters can include a simple logic such as trade long only if price is above 200 SMA and trade short only if price is below 200 SMA. Or it can be as complex as looking into the divergence signals or other complex variables.
Editors' picks
Education
by Trendoscope
13
Learn Ascending, Decending and Symmetrical Triangles | Powerful Hey traders, In this post, we will discuss 3 simple and profitable types of a triangle pattern. 1️⃣ The first type of triangle is called a descending triangle. It is a reversal price action pattern that quite accurately indicates the exhaustion of a bullish trend. Setting a new higher high the market retraces and sets a higher low, then bulls start pushing again but are not able to retest a current high and instead the price sets a lower high and drops to the level of the last higher low setting an equal low. Multiple lower highs compose a horizontal support that is called a neckline. The price keeps trading in such a manner, setting lower highs and equal lows till the price sets a new lower low. Most of the time, it gives a very accurate signal of a coming bearish move. Please, note that a triangle formation by itself does not give an accurate short signal. The trigger that you should wait for is a formation of a new lower low. Take a look at a descending triangle formation that I spotted on Crude Oil on a 4H time frame. Bearish movement was confirmed after a breakout of the neckline of the pattern. 2️⃣ The second type of triangle is called a symmetrical triangle. It is a classic indecision pattern. It can be formed in a bullish, bearish trend, or sideways market. The price action starts contracting within a narrowing range, setting lower highs and higher lows. Based on them, two trend lines can be drawn. Breakout of one of the trend lines with a quite high probability indicates a future direction of the market. Above is a great example of a symmetrical triangle. Bullish breakout of its upper boundary - a falling trend line was a strong bullish confirmation. 3️⃣ The third type of triangle is called an ascending triangle. It is a reversal price action pattern that quite accurately indicates the exhaustion of a bearish trend. Setting a new lower low, the market retraces and sets a lower high, then bears start pushing again but are not able to retest a current low and instead the price sets a higher low and bounces to the level of the last lower high setting an equal high. A sequence of equal highs compose a strong horizontal resistance that is called a neckline. The price keeps trading in such a manner, setting higher lows and equal highs till the price sets a new higher high. Most of the time, it gives a very accurate signal of a coming bullish move. 📍Please, note that an ascending triangle formation by itself does not give an accurate long signal. The trigger that you should wait for is a formation of a new higher high. Ascending triangle formation helped me to accurately predict a bullish reversal on USDJPY. Its neckline breakout was a strong bullish confirmation. Learn to recognize such triangles and you will see how accurate they are. Let me know what pattern do you want to learn in the next post?
OANDA:XAUUSDEducation
by VasilyTrader
6
Algorithmic Identification and Classification of Chart PatternsWelcome to the world of technical analysis, where chart patterns play a pivotal role in shaping trading strategies. This is an ultimate guide designed to help users objectively identify the existence of patterns, define the characteristics and classify them. In this discussion, we will mainly concentrate on the patterns formed by trend line pairs. This includes wedges, triangles and channel type patterns. 🎲 Basic Principle of Identifying the Pattern It is very important to apply definitely set of rules when identifying the patterns in order to avoid biases or fitting patterns to our opinions. The dangers of overfitting the patterns to our bias is documented in the idea To identify the patterns objectively, we need to set some ground rules or follow a well-defined technique to derive the patterns. Here is the technique we follow to identify chart patterns. 🎲 Only Indicator Required - Zigzag Tradingview has plenty of free community scripts for Zigzag indicator. For this demonstration, we are going to use our Multi Timeframe Recursive Zigzag implementation. Once the indicator is loaded on the chart, go to indicator settings and perform these modifications. Disable the Labels : The Labels contain information that is needed for this exercise. Set the Highlight level to 1 or 0 : We can iteratively increase the level and check next levels on the go. You can also adjust Zigzag Length and Depth Parameters. 🎲 Scanning and Identification of valid Pattern We can either use 5 pivots or 6 pivots for pattern identification. 5-Pivot based scanning will generate more patterns than 6-Pivot based scanning. 6 pivot patterns are geometrically more accurate however, there is no proof that 6-Pivot based patterns produce better trading outcome. 🎯 Step 1 - On each level of zigzag, mark the last 5 or 6 zigzag pivots. Since we are using Multi Timeframe Recursive Zigzag implementation, we can gradually increase the zigzag level from 0. This means that on every level, we can check if there are any patterns. On each level - consider only the last 5 or 6 pivots and mark them on the chart. Markings on Level 0 would look like this for 5 and 6 pivot scanning 🎯 Step 2: Draw Trend Lines As part of this step, draw two trend lines. The first trend line will join pivots 1 and 5 marked in the previous step. The second trend line will join pivots 2 and 4 marked in the previous step for 5 pivot scanning. For 6 pivot scanning, the trend line joining pivots 2 and 6 will be marked. 🎯 Step 3: Inspect the validity of trend lines A valid trend line is the one that confirm to below two points Touches all the alternate pivots. For example, the trend line drawn from pivot 1 to 5 should also make contact with the candle of pivot 3. In case of 6 pivot scanning, the trend drawn from pivot 2 to 6 should also make contact with the candle of pivot 4. All the candles from the starting pivot to ending pivot of the zigzag should be confined within the trend line pairs. Meaning, no candles should completely go above the upper trend line and no candle should completely go below the lower trend line. Please note that while verifying the above points, minor adjustments in the alignment of the trend line can be made. Start and end of the trend line does not need to be on the high/low points of the candle, it can also be placed in any of the wick positions. After adjusting the trend lines, in both type of scanning, we can see that the trend lines confirm to the above-mentioned rules. Hence, we have arrived with valid patterns in both types of scanning on the level 0 zigzag. 🎲 Classification of Patterns Once the patterns are identified, they need to be classified into different types. We need to apply predetermined rules to objectively classify patterns into what they are. Everyone can build their own rules. 🎯 Properties of Derived Trend Lines Before classifying the trend lines, we need to understand below properties of the derived trend lines. ▶ Direction of Individual Trend Lines Both the trend lines needs to be individually classified among these categories Rising - Trend Line is sharply rising up. Falling - Trend Line is sharply falling down. Flat - Trend Line is flat across the pivots. Bi-Directional - Trend Lines are moving in opposite directions Please note that, it is less probable for trend line to absolutely flat. Hence, allow angle to have certain degree of threshold to be considered as flat. For example, +- 10 degrees can be considered as flat. Also, the angle of the trend line can further subjective based on how compressed the chart is. It is recommended to use either log/auto-scale or a specific formula based on ATR to identify the angle. ▶ Characteristic of the Trend Line Pairs This parameter defines how both trend lines are aligned with respect to each other. Possible options are: Converging - Trend Lines are converging and when extended towards the right will intersect at a visible distance. Diverging - Trend Lines are diverging from each other and when extended towards the left will intersect at a visible distance. Parallel - Trend Lines are almost parallel to each other and may not intersect to either right or to left at a visible distance. To objectively identify the intersection distance, we further need to use some standard. Here are few options Fixed Number of Bars : If the trend lines do not intersect to either left or right within X bars (Lets say 100), they can be considered as parallel. Otherwise, they can be classified as converging or diverging based on which side the intersection happens. Relative to the Length of Pattern : If the length of longest trend line is X bars. The trend lines should converge within 1–2 times the X bars to be considered as converging or diverging. Or else, it can be termed as parallel channels. 🎯 Geometrical Shapes Classification Following are the main geometrical classifications based on the characteristics of the trend lines and the pair. Channels - Trend Lines are parallel to each other. And hence they both move in the same directions. Wedges - Trend Lines are either converging or diverging from each other. However, both trend lines move in the same direction. Both trend lines will be either up or down. Triangles - Trend Lines are either converging or diverging from each other. But, unlike wedges, upper and lower trend lines will have different direction. 🎲 Types of Patterns Once we identify the direction and characteristics of trend lines, we can go on and classify the pattern in following categories. Details below. Please note that examples are generated programmatically. 🎯 Rising Wedge (Contracting) Rules for Contracting Rising Wedge are as follows: Both Trend Lines are Rising Trend Lines are converging. 🎯 Rising Wedge (Expanding) Rules for the Expanding Rising Wedge are as follows: Both Trend Lines are rising Trend Lines are diverging. 🎯 Falling Wedge (Contracting) Rules for the Contracting Falling Wedge are as follows: Both Trend Lines are falling Trend Lines are contracting. 🎯 Falling Wedge (Expanding) Rules for the Expanding Falling Wedge are as follows: Both Trend Lines are falling Trend Lines are diverging. 🎯 Contracting/Converging Triangle Rules for the Contracting Triangle are as follows The upper trend line is falling The lower trend line is rising Naturally, the trend lines are converging. 🎯 Rising Triangle (Contracting) The rules for the Contracting Rising Triangle are as follows The upper trend line is flat The lower trend line is rising Naturally, the trend lines are converging towards each other 🎯 Falling Triangle (Contracting) The rules for the Contracting Falling Triangle are as follows The upper trend line is falling The lower trend line is flat Naturally, the trend lines are converging towards each other 🎯 Expanding/Diverging Triangle Rules for the Expanding Triangle are as follows The upper trend line is rising The lower trend line is falling Naturally, the trend lines are diverging from each other. 🎯 Rising Triangle (Expanding) The rules for the Expanding Rising Triangle are as follows The upper trend line is rising The lower trend line is flat Naturally, the trend lines are diverging from each other 🎯 Falling Triangle (Expanding) The rules for the Expanding Falling Triangle are as follows The upper trend line is flat The lower trend line is falling Naturally, the trend lines are diverging from each other 🎯 Rising/Uptrend Channel Rules for the Uptrend Channel are as follows Both trend lines are rising Trend lines are parallel to each other 🎯 Falling/Downtrend Channel Rules for the Downtrend Channel are as follows Both trend lines are falling Trend lines are parallel to each other 🎯 Ranging Channel Rules for the Ranging Channel are as follows: Both trend lines are flat Naturally, the trend lines are parallel to each other.
Editors' picks
CAPITALCOM:US100Education
by Trendoscope
44
CHARTIST TRIANGLES: HOW DOES IT WORK? ANSWER is HERE!ASCENDING TRIANGLE: Identify the levels where the price has often closed and opened (black line). The price is making higher and higher lows. Draw a bullish diagonal. Take Profit is calculated by plotting the lowest increase on the black line (see graph). Report this segment to the BREAK of the black line, but ESPECIALLY to the CLOSING of the candle in its time unit!!! ___________________________________________________ DESCENDING TRIANGLE: Identify the levels where the price has often closed and opened (black line). The price makes higher and lower highs. Draw a bullish diagonal. Take Profit is calculated by plotting the highest drop on the black line (see graph). Report this segment to the BREAK of the black line, but ESPECIALLY to the CLOSING of the candle in its time unit!!! ___________________________________________________ SYMMETRICAL TRIANGLE: The triangle of indecision, just like the RANGE!! The price is tightening, and we don't know in which direction it's going PETER!!?? Draw a bullish and bearish diagonal. Wait for a break in one of the diagonals. The Take Profit is calculated by reporting the highest side of the rectangle which made a PULLBACK (see my old publication on "PULLBACK") and see graph below. Report this segment to the BREAK of one of the diagonals, but ESPECIALLY to the CLOSING of the candle in its time unit!!! STOP Loss below the previous low if you are BUYING. STOP Loss above the previous high if you are SHORT (Seller). ​
Education
by Le-Loup-de-Zurich
What do you do when your trading plan fails? Yesterday I wrote about a beautiful chart pattern that was forming on the Bitcoin daily time frame that ended up failing not long after I wrote the post. That kind of thing will shake a trader to their core, especially if they thought it was going to play out, but ended up losing their shirt. This is why it is important to set stop losses, so that if the trade does go the other way, you will be out of the trade before it gets too bad. This is simply called risk management, and is one of the biggest things that any trader, especially new traders need to master. Trading is a business of statistics and probabilities. Just because something has worked for you in the past, doesn't mean it is going to work for you every time. So when something like a bullish pattern that you have traded many times fails, you have to reassess and move on to the next trade. Out of 100 trades, that pattern may only work 6 or 7 times which gives you a 60-70% chance of it working in your favor. That's how it works, nothing is ever 100% in this game. So you always have to be ready for things to not work out the way you think they should. If they don't work out, don't freak out! Just learn from your mistakes, readjust your plan, and move along to the next trade! Hopefully things like this will help you better understand the importance of a good risk management plan. Be safe out there everyone and trade logically!
COINBASE:BTCUSDEducation
by thelogicaldude
4 Triangle Types You Need to KnowTriangle chart patterns offer valuable insights into market dynamics, symbolizing a clash between buyers and sellers within a contracting price range. These patterns are often classified as continuation or neutral patterns, suggesting that the price is likely to persist in its existing trend after the pattern concludes. 1. Symmetrical Triangle: A symmetrical triangle manifests when the slope of the price's highs and lows converges, creating a triangular structure. This pattern signifies a period of consolidation, with lower highs and higher lows indicating equilibrium between buyers and sellers. As the slopes converge, a breakout becomes imminent, though the breakout direction remains uncertain. To capitalize on a symmetrical triangle , consider placing entry orders above the slope of the lower highs and below the slope of the higher lows, prepared to ride the price in the direction of the breakout. 2. Ascending Triangle: An ascending triangle features a resistance level and a slope of higher lows. Buyers gradually push the price up, testing the resistance level. This pattern often signals an upward breakout as buyers gain strength and attempt to breach the resistance. To trade an ascending triangle , set entry orders above the resistance line and below the slope of the higher lows, anticipating a potential upward breakout. However, remain open to movement in either direction, as the resistance level may prove formidable. 3. Descending Triangle: In contrast to the ascending triangle , a descending triangle comprises lower highs forming the upper line, with a robust support level acting as the lower line. Sellers gain ground against buyers, and in most cases, the support line eventually breaks, leading to a continued downward move. To trade a descending triangle , set entry orders above the upper line (lower highs) and below the support line, prepared for a potential breakout. Note that sometimes, the support line may hold, resulting in a robust upward move. 4. Broadening Triangle: Now, let's delve into the captivating Broadening Triangle , also known as a Megaphone Pattern. This pattern stands out due to its expanding price range, creating a distinctive visual pattern on the chart. The Megaphone Pattern comprises a series of higher highs and lower lows, causing the price range to widen over time. This pattern reflects increasing volatility and uncertainty in the market, with both buyers and sellers actively participating. Trading Triangles demands meticulous analysis and risk management due to their nature and potential for unpredictable price moves. To approach Triangle patterns effectively: 1️⃣ Pay attention to the pattern's boundaries: Identify the upper trendline connecting the highs and the lower trendline connecting the lows. These trendlines define the range of price movement within the pattern. 2️⃣ Watch for breakouts and reversals: Triangles often precede significant price movements. Look for breakouts above the upper trendline or breakdowns below the lower trendline as potential trading opportunities. 3️⃣ Confirm with additional indicators: Combine your analysis with other technical indicators or tools to validate your trading decisions. Consider using indicators like moving averages, oscillators, or volume analysis to confirm the pattern's potential direction. Remember, trading Triangles necessitates careful analysis and risk management. Consider the overall market context, fundamental factors, and other technical signals to make informed trading decisions. While chart patterns provide valuable insights, they cannot guarantee future price movements. Always conduct thorough research, stay updated with market news, and adapt your strategy as market conditions evolve. Wishing you successful trading journeys guided by these patterns! 🚀📈✨ 💬 We would love to hear your thoughts and feedback on the article! Please leave your comments and questions below the article. Your input is valuable to us!
Education
by Vestinda
6
World Wars & US Inflation From 1914This is the US Inflation Rate (YoY) from 1914 until 2022. Symbol is called USIRYY and it measures the Inflation Volatility in the United States. With the War going on in Ukraine, and Russia trying to force its way through, I took the liberty of looking into the following: - How Global Wars Affect Inflation - How US Inflation Reacts to External Wars - How Wars Affect the Financial Markets You can see the time-lines, it's all laid-out in the chart (graph). I took all the Major World Wars and events that significantly affected, not only the US Inflation, but Inflation itself. First of all, the US Inflation Rate (USIRYY) tells me the following: * When the US was involved in a War, we can notice that the US Inflation spiked. * Most of the times when US was not involved in an External War, then Inflation dropped. That's because of War & Uncertainty Sentiment around this "terrific" word. War does not bring anything good, in fact, in only brings bad times. People die and global sentiment gets super-negative. This of course, leads to... you guessed it: Market Crash. Why? Because after or during times of War, there are Recessions and Depressions. Supply Chains are disrupted and the Global Economy falls on its face. What about looking at things from a Technical Analysis perspective? * Symmetrical Triangle: and the only way is UP! I will give you points which I believe are worth keeping in mind for the next Market Crash. First of all, let's be logical about this. Winter is coming and it's only gonna get worse before it gets better. As Inflation spiked to a 40y high, the higher powers intervened, in an attempt to cool the Inflation spike off. I'm talking here about the Federal Reserve (FED) ramping up the Interest Rates. This is the Effective Federal Funds Rate (FEDFUNDS). Can you see the break-out? They want to calm down Inflation, but they can't. Why? Because this is no ordinary Inflationary period, it's a long-lasting thing. One of those hyperinflation, deflation, stagflation, or whatever the heck these experts call it... :) The Volatility Index (VIX) tells me that another spike in Fear Sentiment is inevitable. I'm in love with Elliott Wave Analysis, so I labeled this next chart. This is the United States Consumer Confidence Index (USCCI) and it measures exactly what its name says, LOL. When it drops, people are freaking out. When it rises, people are optimistic and the Markets are going up. Daaaa! With all that said, what's the bottom line here? I believe that periods of terror are gonna hit us all. Are we having World War 3? Who the heck knows? All I know is that there are more pieces to this puzzle: United States 10Y Bonds (USB10YUSD) have reached the Support, and a spike bigger than the Covid Pandemic has started: The 10Y Treasury Note Yield (TNX) have broken out of a 40y down-trend: Isn't it ironic how it synced with the Inflation 40y high? Damn! Germany 40 (DAX, GER30, GRXEUR) is doomed. Fractal sequence, Descending Channel, and a "beautiful" ABC Elliott Wave Pattern. So, how can you prosper from all this? Metals could be a good hedge. Gold (XAUUSD) just broke out of an important Bearish Structure. Maybe it will go up. Natural Gas (NG1!) & Crude Oil (USOIL) however, are showing Bearish Reversals. Bitcoin (BTCUSD) is Bearish until further notice as well. But this may become the new currency moving forward. In times of terror, the banking systems might need to change. Cash and Card is so '00. WHAT'S YOUR TAKE? WAR OR PEACE? Leave your commend down below. Cheers! Richard
ECONOMICS:USIRYYEducation
by Lionheart-EWA
5
The Triangles. With Real-Life Examples.Today, let's back to fairly good known triangle shapes: Symmetrical, Ascending, Descending and Broadening Triangles. Triangle chart patterns provide valuable insights into market dynamics, representing a battle between buyers and sellers within a narrowing price range. These patterns are often categorized as continuation or neutral patterns indicating that the price is likely to continue its existing trend after the pattern completes. 1. Symmetrical Triangle: A symmetrical triangle occurs when the slope of the price's highs and lows converge, forming a triangular shape. This pattern signifies a period of consolidation, with lower highs and higher lows indicating a balance between buyers and sellers. As the slopes converge, a breakout becomes imminent, although the direction of the breakout is uncertain. To take advantage of a symmetrical triangle, we can place entry orders above the slope of the lower highs and below the slope of the higher lows, prepared to ride the price in the direction of the breakout. 2. Descending Triangle: In contrast to the ascending triangle, a descending triangle consists of lower highs forming the upper line, with a strong support level acting as the lower line. Sellers gain ground against buyers, and in most cases, the support line eventually breaks, leading to a continued downward move. To trade a descending triangle, we can set entry orders above the upper line (lower highs) and below the support line, prepared for a potential breakout. However, it's important to note that in some instances, the support line may hold, resulting in a strong upward move. 3. Ascending Triangle: An ascending triangle features a resistance level and a slope of higher lows. Buyers gradually push the price up, testing the resistance level. This pattern often signals a breakout to the upside, as buyers gain strength and attempt to break through the resistance. To trade an ascending triangle, we can set entry orders above the resistance line and below the slope of the higher lows, ready for a potential upward breakout. However, it's important to remain open to movement in either direction, as sometimes the resistance level may prove too strong. 4. Broadening Triangle: Now, let's dive into the intriguing Broadening Triangle, also known as a Megaphone Pattern. This pattern stands out due to its expanding price range, creating a unique visual pattern on the chart. The Megaphone Pattern consists of a series of higher highs and lower lows, causing the price range to widen over time. This pattern reflects increasing volatility and uncertainty in the market, with both buyers and sellers actively participating. To approach Triangle patterns effectively: 1️⃣ Pay attention to the pattern's boundaries: Identify the upper trendline connecting the highs and the lower trendline connecting the lows. These trendlines define the range of price movement within the pattern. 2️⃣ Watch for breakouts and reversals: Triangles often precedes significant price movements. We can look for breakouts above the upper trendline or breakdowns below the lower trendline as potential trading opportunities. 3️⃣ Confirm with additional indicators: Combine your analysis with other technical indicators or tools to validate your trading decisions. Consider using indicators like moving averages, oscillators, or volume analysis to confirm the pattern's potential direction. Remember, trading the Triangles requires careful analysis and risk management. It's important to consider the overall market context, fundamental factors, and other technical signals to make informed trading decisions. Wishing you successful trading journeys guided by these fascinating patterns! 🚀📈✨
Education
by Vestinda
TRADING SYMMETRICAL⬇️⬆️🔄 ASCENDING📈 DESCENDING📉🔻⬇️TRIANGLES Hello traders, today we will delve into three types of triangles, which are significant chart patterns providing valuable insights into potential market movements. Understanding these patterns can play a pivotal role in making well-informed trading decisions. Let's explore each type and learn how to identify and interpret them effectively. **1. Symmetrical Triangle:** The symmetrical triangle pattern is formed by a series of lower highs and higher lows, resulting in converging trendlines. It indicates a period of market consolidation, where the price oscillates between lower highs and higher lows, signaling an imminent breakout in either direction. **Key Characteristics:** - **Shape:** Resembles a triangle, with converging trendlines. The horizontal resistance line connects the price highs, while the rising trendline connects the higher lows. - **Duration:** Can take several weeks or even months to form, depending on the time frame being analyzed. - **Volume:** As the symmetrical triangle develops, the trading volume tends to diminish. However, during the breakout, there may be an increase in volume, confirming the validity of the pattern. - **Breakout:** The pattern is confirmed once the price breaks decisively above the horizontal resistance line (bullish breakout) or below the rising trendline (bearish breakout). - **Price Target:** To estimate the potential price target after the breakout, measure the height of the triangle at its widest point (the distance between the highest high and lowest low within the triangle) and project it in the direction of the breakout. - **Stop Loss:** Traders typically place their stop-loss orders just outside the triangle, slightly beyond the opposite trendline from the direction of the breakout, to protect against false breakouts. Traders often enter a long (buy) position when the price breaks above the horizontal resistance line with a significant increase in volume or below the rising trendline in the case of a bearish breakout. **Limitations:** - **False Breakouts:** Sometimes, the price may briefly break above the resistance line or below the rising trendline, only to reverse in the opposite direction, causing a false breakout. Waiting for confirmation is crucial to avoid getting trapped in false signals - **Market Context:** While the symmetrical triangle indicates potential continuation, it's essential to consider the broader market context and use other technical indicators or fundamental analysis to support trading decisions. **2. Ascending Triangle:** The ascending triangle pattern is a bullish chart pattern that forms during an uptrend and represents a continuation pattern. It is formed by a horizontal resistance level and an upward-sloping trendline acting as support. This pattern suggests that buying pressure is gradually intensifying, and a breakout above the horizontal resistance may trigger a bullish move. **Key Characteristics:** - **Shape:** Resembles a triangle, where the horizontal resistance line connects two or more price highs, and the rising trendline connects higher lows. - **Duration:** The pattern can take several weeks or even months to form, depending on the time frame being analyzed. - **Volume:** Volume tends to diminish as the pattern develops. However, during the breakout, there is often an increase in volume, confirming the pattern's validity. - **Breakout:** The pattern is confirmed once the price breaks above the horizontal resistance line. The breakout is considered a bullish signal, suggesting that the upward trend is likely to continue. - **Price Target:** To estimate the potential price target after the breakout, measure the height of the triangle's base (the distance between the horizontal resistance line and the rising trendline) and project it upward from the breakout point. - **Stop Loss:** Traders typically place their stop-loss orders just below the rising trendline to protect against a false breakout. **Trading the ascending triangle:** - **Entry:** Traders often enter a long (buy) position when the price breaks above the horizontal resistance line with a surge in volume. - **Stop Loss:** The stop-loss level is usually set just below the rising trendline. - **Take Profit:** The take-profit level is determined using the measured move method by adding the height of the triangle's base to the breakout point. - **Confirmation:** It is crucial to wait for a clear breakout before entering the trade, as false breakouts can occur. A significant increase in volume during the breakout is often considered a strong confirmation signal. **Limitations:** - **False breakouts:** Sometimes, the price may break above the resistance line temporarily and then reverse lower, causing a false breakout. It is essential to wait for a clear confirmation. - **Market context:** While the ascending triangle is a bullish pattern, it's important to consider the broader market context and analyze other indicators to confirm the likelihood of the pattern leading to a successful trade. **3. Descending Triangle:** The descending triangle pattern is a bearish chart pattern that forms during a downtrend and represents a continuation pattern. It is formed by a horizontal support level and a downward-sloping trendline as resistance. This pattern indicates that selling pressure is progressively strengthening, and a breakdown below the horizontal support might lead to a bearish move. **Key Characteristics:** - **Shape:** Resembles a triangle, where the horizontal support line connects two or more price lows, and the downward-sloping trendline connects lower highs. - **Duration:** The pattern can take several weeks or even months to form, depending on the time frame being analyzed. - **Volume:** Volume tends to diminish as the pattern develops. However, during the breakdown, there is often an increase in volume, confirming the pattern's validity. - **Breakdown:** The pattern is confirmed once the price breaks below the horizontal support line. The breakdown is considered a bearish signal, suggesting that the downtrend is likely to continue. - **Price Target:** To estimate the potential price target after the breakdown, measure the height of the triangle's base (the distance between the horizontal support line and the downward-sloping trendline) and project it downward from the breakdown point. - **Stop Loss:** Traders typically place their stop-loss orders just above the downward-sloping trendline to protect against a false breakdown. **Trading the descending triangle:** - **Entry:** Traders often enter a short (sell) position when the price breaks below the horizontal support line with a surge in volume. - **Stop Loss:** The stop-loss level is usually set just above the downward-sloping trendline. - **Take Profit:** The take-profit level is determined using the measured move method by subtracting the height of the triangle's base from the breakdown point. - **Confirmation:** It is crucial to wait for a clear breakdown before entering the trade, as false breakdowns can occur. A significant increase in volume during the breakdown is often considered a strong confirmation signal. **Limitations:** - **False breakdowns:** Sometimes, the price may break below the support line temporarily and then reverse higher, causing a false breakdown . It is essential to wait for a clear confirmation. - **Market context:** While the descending triangle is a bearish pattern, it's important to consider the broader market context and analyze other indicators to confirm the likelihood of the pattern leading to a successful trade. **In conclusion, understanding these triangle patterns can provide valuable insights into potential market movements. Traders should use them as part of their technical analysis toolkit and combine them with other forms of analysis to make well-informed trading decisions. Happy trading! 📈💹** TCPLTP
Education
by TradeChartPatternsLikeThePros
2
Meet All Triangles — Quick and Easy Guide.📊✨ Discovering All Triangle Chart Patterns 📈✨ Welcome, traders and investors, to the exciting world of Triangle patterns! Today, we'll explore all known triangle shapes: Symmetrical, Ascending, Descending and Broadening Triangles. Triangle chart patterns provide valuable insights into market dynamics, representing a battle between buyers and sellers within a narrowing price range. These patterns are often categorized as continuation or neutral patterns indicating that the price is likely to continue its existing trend after the pattern completes. Symmetrical Triangle: A symmetrical triangle occurs when the slope of the price's highs and lows converge, forming a triangular shape. This pattern signifies a period of consolidation, with lower highs and higher lows indicating a balance between buyers and sellers. As the slopes converge, a breakout becomes imminent, although the direction of the breakout is uncertain. To take advantage of a symmetrical triangle, we can place entry orders above the slope of the lower highs and below the slope of the higher lows, prepared to ride the price in the direction of the breakout. Ascending Triangle: An ascending triangle features a resistance level and a slope of higher lows. Buyers gradually push the price up, testing the resistance level. This pattern often signals a breakout to the upside, as buyers gain strength and attempt to break through the resistance. To trade an ascending triangle, we can set entry orders above the resistance line and below the slope of the higher lows, ready for a potential upward breakout. However, it's important to remain open to movement in either direction, as sometimes the resistance level may prove too strong. Descending Triangle: In contrast to the ascending triangle, a descending triangle consists of lower highs forming the upper line, with a strong support level acting as the lower line. Sellers gain ground against buyers, and in most cases, the support line eventually breaks, leading to a continued downward move. To trade a descending triangle, we can set entry orders above the upper line (lower highs) and below the support line, prepared for a potential breakout. However, it's important to note that in some instances, the support line may hold, resulting in a strong upward move. Broadening Triangle: Now, let's dive into the intriguing Broadening Triangle, also known as a Megaphone Pattern. This pattern stands out due to its expanding price range, creating a unique visual pattern on the chart. The Megaphone Pattern consists of a series of higher highs and lower lows, causing the price range to widen over time. This pattern reflects increasing volatility and uncertainty in the market, with both buyers and sellers actively participating. Trading Triangles requires careful analysis and risk management due to its nature and potential for unpredictable price moves. To approach Triangle patterns effectively: 1️⃣ Pay attention to the pattern's boundaries: Identify the upper trendline connecting the highs and the lower trendline connecting the lows. These trendlines define the range of price movement within the pattern. 2️⃣ Watch for breakouts and reversals: Triangles often precedes significant price movements. We can look for breakouts above the upper trendline or breakdowns below the lower trendline as potential trading opportunities. 3️⃣ Confirm with additional indicators: Combine your analysis with other technical indicators or tools to validate your trading decisions. Consider using indicators like moving averages, oscillators, or volume analysis to confirm the pattern's potential direction. Remember, trading the Triangles requires careful analysis and risk management. It's important to consider the overall market context, fundamental factors, and other technical signals to make informed trading decisions. While chart patterns provide valuable insights, they cannot guarantee future price movements. Always conduct thorough research, stay updated with market news, and adapt your strategy as market conditions evolve. Wishing you successful trading journeys guided by these fascinating patterns! 🚀📈✨
INDEX:BTCUSDEducation
by Vestinda
📈 HOW TO: ASCENDING TRIANGLE PATTERN📍 What Is an Ascending Triangle? This pattern emerges when the price movement allows for a horizontal line to be drawn across the swing highs, while a rising trendline is drawn along the swing lows. These two lines together form a triangle shape. Traders actively monitor triangle patterns for potential breakouts, which can occur either upward or downward. Ascending triangles are often referred to as continuation patterns because they typically result in a breakout in the same direction as the prevailing trend that was present before the triangle formation. This pattern offers traders a clear entry point, profit target, and stop-loss level, making it a tradable opportunity. It is worth noting that an ascending triangle can be distinguished from a descending triangle. 📍 How to Identify and Use the Ascending Triangle Candlestick pattern To identify the ascending triangle pattern, you need to look for a period of price consolidation within an ongoing uptrend. During this phase, the price will exhibit a series of lower highs and higher lows, indicating a temporary balance between buyers and sellers. The upper resistance line of the pattern can be found by connecting at least two highs within the consolidation phase, while a rising trendline is drawn by connecting at least two higher lows. Confirming the pattern involves ensuring that the price was in a clear uptrend before the consolidation phase, the upper resistance line is horizontal or slightly slanted upward, and the rising trendline intersects with the upper resistance line. Additionally, analyzing candlestick patterns within the consolidation phase, such as doji, hammer, or engulfing patterns, can provide further confirmation of buying pressure. Once the ascending triangle pattern is confirmed, traders can set their entry and exit points. Typically, a long position is entered when the price breaks above the upper resistance line, indicating a bullish breakout. The height of the triangle pattern can be used to estimate a target price level, and a stop-loss order should be placed below the pattern to manage risk. 💥 Key Takeaways 🔹 Ascending triangles are considered a continuation pattern, as the price will typically break out of the triangle in the price direction prevailing before the triangle, although this won't always occur. 🔹 The trendlines of a triangle need to run along at least two swing highs and two swing lows. 🔹 A long trade is taken if the price breaks above the top of the pattern. 🔹 A short trade is taken if the price breaks below the lower trendline. 🔹 A profit target is calculated by taking the height of the triangle, at its thickest point, and adding or subtracting that to/from the breakout point. 🔹 A stop loss is typically placed just outside the pattern on the opposite side from the breakout. 👤 @QuantVue 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
3
🚩Symmetrical Triangle🚩 #️⃣OKXIDEAS !!!👨‍🏫Hello, everyone!👋 (Reading time less than 7 minutes⏰). I’m here with another educational post to help you learners become super traders gradually. 🔅 As you know, various tools are usually used in any financial market to analyze all types of stocks, cryptocurrencies, and assets. Chart patterns are one of the essential tools used in technical analysis, and analysts evaluate the market movement and prepare to trade based on technical-fundamental studies. 🔅 The Symmetrical Triangle is one of the most used classic continuous patterns in the field, but it can sometimes turn into reversal patterns, as some analysts say. 🔷 So I’ll explain the following in this article: Defining the triangle pattern Getting to know the structure of a Symmetrical Triangle Types of Symmetrical Triangles How to trade using the Symmetrical Triangle pattern Price target after Symmetrical Triangle pattern The importance of trading volume in the Symmetrical Triangle pattern --------------------------------------------------------------------------------------------------------- Triangle Pattern: 🔅The triangle pattern is one of the most well-known patterns many traders spend time on. A triangle is a trend continuation pattern that can occur in upward or downward trends. This triangle pattern is formed when a stock, cryptocurrency, or whatever shrinks towards an uptrend or downtrend. The pattern represents a pause in the price trend, and the price consolidates in a range. 🔅 The triangle pattern consists of two converging lines with different slopes depending on the type. At least four major pivots are needed in the specific time frame to form a triangle pattern. Basically, to form a triangle, 45 to 60 candles are needed in the specific time frame. 🔅 The take-profit of this pattern is considered the distance from the first top to the first bottom inside the triangle. 🔷 According to research, 84% agree that the triangle pattern is a continuation pattern that is divided into three types as follows: Symmetrical triangle Ascending Triangle Descending Triangle --------------------------------------------------------------------------------------------------------- One of the types of triangles that can lead you to money is Symmetrical Triangle which I’ll explain here: Symmetrical Triangle Pattern in Upward Trends: Take a look at the picture below. You can see the price forms tops and bottoms after an upward trend and then forms lower tops and higher bottoms. 🔅 Now try to draw a resistance line at the top and a support line at the bottom. What do you see? Yeah! That’s a triangle. These two lines will make a tip called the triangle's apex. If the four pivots(at least), two tops and two bottoms, are connected with a line, you can say a Symmetrical Triangle pattern in an upward trend has occurred. 🔅 It’s noted that if the price breaks the support trend line and drops, you’ll see this as a reversal pattern or a Symmetrical Triangle in the downward trend. Not always; a Symmetrical Triangle is a continuous pattern. So Watch out! Here’s a picture of a reversal Symmetrical Triangle and how to trade while it is considered a reversal. How to trade on the Symmetrical Triangle in an upward trend: 1-After the pattern completes, you must wait for the pattern to give us the entry confirmation(the upper line of the Symmetrical Triangle). 2-Try to open a long position when the real breakout happens. That can make a good profit. The real breakout occurs when a green candle like the Marubozu candle closes above the upper line of the Symmetrical Triangle or the resistance line. 3-Don’t forget to put a stop-loss. That will be below the breakout candle or below the prior candle’s bottom. The distance between the first top and the first bottom in the triangle would be one of high risk-to-reward ratio take-profit points. The other way to take the profit is to draw a line from the first top facing the support trend line along. --------------------------------------------------------------------------------------------------------- Symmetrical Triangle Pattern in Downward Trends 🔅 Another trend that a Symmetrical Triangle can move is downward trend when the price continues downward after forming the pattern. 🔅 Luckily, one of the best tools that can help you earn lots of money is the Symmetrical Triangle because it supports two-sided markets. But the question is how this type of triangle forms. Stay with me. 🔅 Imagine you’re walking through the bushes for a long time, then you’ll get tired, and you don’t feel energetic in your feet to move on. So do buyers and sellers in the financial markets. 🔅 When the price of an asset enters a converging trend of lower tops and higher bottoms, buyers and sellers test how strong the trend is. The buyers make bottoms at a higher price as sellers prevent the creation of a higher top. 🔅 In this case, the sellers are mostly winners, so better to be a seller rather than a buyer. Like the pattern I already discussed, the Symmetrical Triangle pattern in a downward trend needs at least four significant pivots to be confirmed. 🔅 There's also a possibility of breaking the upper line of the Symmetrical Triangle on the top after the Symmetrical Triangle pattern formation. The reversal pattern has occurred in this case, and the long position is considered a plan. How to trade on the Symmetrical Triangle in a downward trend: 1-You have to wait for the candles to break the lower line of the Symmetrical Triangle. But the only key point is that if the breakout is valid. So if the breakout candle closes below the lower line of the Symmetrical Triangle, it’s time to open a short position. 2-The stop-loss will be above the last top. Therefore, in case of opening a short position on an asset, you can also place your stop-loss above the breakout candle for a higher risk-to-reward ratio. 3-The price targets will be 1) the distance between the first bottom and the first top, or 2) you can draw a line from the first bottom facing the resistance line. 🔷 Below, you can see a Symmetrical Triangle in a downward trend and how you can trade with it. --------------------------------------------------------------------------------------------------------- The Importance of Trading Volume in the Symmetrical Triangle Pattern 🔅 The asset chart is in correction as long as the price chart is inside the Symmetrical Triangle pattern. 🔅 The trading volume in the pattern process will be neutral as most traders are waiting for the follow-up movement of the asset. 🔅 The closer the chart gets to the apex of the triangle to depart from the pattern, the range of fluctuations and the trading volume become less and less. 🔅 The importance of trading volume in the Symmetrical Triangle pattern can be seen near the exit from the pattern. 🔅 If the previous trend of the chart was bullish, it is likely that the trading volume will increase dramatically if the pattern is broken. 🔅 Also, the trading volume will decrease near the triangle's apex, but it increases instantly after breaking out, whether it is an upward or downward trend. 🔅 For this purpose, examining the trading volume in different areas of the pattern can greatly help us better understand the trend and predict the future of the asset. 🔅 In a way, you always have to wait for the chart to go out of the pattern, and by checking the direction of the trend and trading volume, you can make a better decision about buying or selling your currencies. --------------------------------------------------------------------------------------------------------- Symmetrical Triangle in Elliott Theory The Symmetrical Triangle called the “Contracting Triangle,” is a basic pattern in Elliott Waves. Elliott triangles can be considered one of the stable consolidation patterns in the market, which can be divided into five waves. To return, each of these five waves carries three sub-waves. The waves of the triangle are named A, B, C, D, and E. The Symmetrical Triangle can often be seen as a continuation pattern that creates a pause in the trend and then resumes. In this pattern, wave A, which is the biggest wave in the pattern, can be a zigzag, double zigzag, triple zigzag, or a flat pattern, and wave B can only be a zigzag, double zigzag, or triple zigzag. Waves D and C can also move in their pattern by a zigzag pattern, and finally, an E wave is formed, which can be a zigzag, double zigzag, triple zigzag, and sometimes a triangle. In a Symmetrical Triangle, waves B, C, and D often cover 61.8% of the previous wave. Finally, by drawing this pattern's up-and-down trend lines, the lines get close to each other and cannot be parallel. --------------------------------------------------------------------------------------------------------- Conclusion: 🔔 In this article, you learned about the Symmetrical Triangle and how to trade using the pattern. You now know where to enter and exit the market to make a suitable profit. Don’t forget to follow your capital management to lower the trading risks.
Education
by pejman_zwin
17
Learn Top 4 Price Action Pattern to Trade Reversals Hey traders, In this article, I will share with you the list of 4 best reversal price action patterns. 📍Ascending & Descending Triangles The main element of the ascending triangle as the REVERSAL pattern is the BEARISH impulse leg, preceding the formation of the pattern. The pattern consist of 2 main elements: a horizontal neckline based on the equal highs, a rising trend line based on the higher lows. ❗️The trigger is a bullish breakout of a neckline of the pattern and candle close above. 📈The position is opened on a retest. 🔴Stop loss is lying at least below the level of the last higher low. 🎯Take profit is the next historical resistance. —————— 📍The main element of the descending triangle formation as the reversal pattern is the BULLISH leg, preceding the formation of the pattern. The pattern consist of 2 main elements: a horizontal neckline based on the equal lows, a falling trend line based on the lower highs. ❗️The trigger is a bearish breakout of a neckline of the pattern and candle close below. 📉The position is opened on a retest. 🔴Stop loss is lying at least above the level of the last lower high. 🎯Take profit is the next historical support. 📍Rising & Falling Wedges What makes a rising wedge pattern a reversal pattern? Before the formation of the pattern, the price should form a strong bullish impulse and trade in a bullish trend. The pattern consists of 2 contracting, rising trend lines based on the higher highs and higher lows. ❗️The trigger is a bearish breakout of a support of the pattern and candle close below. 📉The position is opened on a retest. 🔴Stop loss is lying above the high of the pattern. 🎯Take profit is the closest horizontal support. —————— What makes a falling wedge pattern a reversal pattern? Before the formation of the pattern, the price should form a strong bearish impulse and trade in a bearish trend. The pattern consist of 2 contracting falling trend lines based on the lower lows and lower highs. ❗️The trigger is a bullish breakout of a resistance of the pattern and candle close above. 📈The position is opened on a retest. 🔴Stop loss is lying below the low of the pattern. 🎯Take profit is the closest horizontal resistance. 📍Double Top & Bottom Double bottom pattern usually forms at the end of a bearish trend. After a strong bearish impulse, the price retraces, sets a lower high and retests the current low. Instead of going lower, the price retraces one more time, retests the level of the last lower high and breaks it. Such a formation confirms a bullish reversal. ❗️The trigger is a bullish breakout of a neckline of the pattern and a candle close above. 📈The position is opened on a retest. 🔴Stop loss is lying below the lows of the pattern. 🎯Take profit is the closest horizontal resistance. —————— Double top pattern usually forms at the end of a bullish trend. After a strong bullish impulse, the price retraces, sets a higher low and retests the current high. Instead of going higher, however, the price retraces one more time, retests the level of the last higher low and breaks it. Such a formation confirms a bearish reversal. ❗️The trigger is a bearish breakout of a neckline of the pattern and a candle close below. 📈The position is opened on a retest. 🔴Stop loss is lying above the highs of the pattern. 🎯Take profit is the closest horizontal support. 📍Head & Shoulders Pattern & Inverted One Inverted H&S pattern usually forms at the end of a bearish trend. The price forms a zig-zag movement with 3 main elements: the left shoulder with a lower low, the head with a new lower low, and the right shoulder with a higher low. While the price sets multiple lows, it keeps setting the equal highs, composing a so-called horizontal neckline. A bullish reversal becomes confirmed once the price breaks and closes above the neckline. ❗️The trigger is a bullish breakout of a neckline of the pattern and a candle close above. 📈The position is opened on a retest. 🔴Stop loss is lying below the lows of the pattern. 🎯Take profit is the closest horizontal resistance. —————— Head & Shoulders pattern usually forms at the end of a bullish trend. The price forms a zig-zag movement with 3 main elements: the left shoulder with a higher high, the head with a new higher high, and the right shoulder with a lower high. While the price sets multiple highs, it keeps setting the equal lows, composing a so-called horizontal neckline. A bearish reversal becomes confirmed once the price breaks and closes below the neckline. ❗️The trigger is a bearish breakout of a neckline of the pattern and a candle close below. 📈The position is opened on a retest. 🔴Stop loss is lying above the highs of the pattern. 🎯Take profit is the closest horizontal support. In order to increase the accuracy of trading these patterns, I would recommend trading them only if they are formed on key levels: Bearish patterns on key resistances and bullish patterns on key supports. Also, higher is the time frame where you spotted the patterns, higher is the chance that it will give a valid reversal signal. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
17
📉 4 Common Bearish PatternsIn trading, a bearish pattern is a technical chart pattern that indicates a potential trend reversal from an uptrend to a downtrend. These patterns are characterized by a series of price movements that signal a bearish sentiment among traders. 📍Bear Flag 🔸 A small rectangular pattern that slopes against the preceding trend 🔸 Forms after a rapid price decline (flagpole) 🔸 The pattern is completed when the price breaks below the lower trend line of the flag 📍Descending Triangle 🔸 A bearish continuation pattern that forms with a horizontal support line and a descending trendline 🔸 Forms as the price reaches lower highs, while the lows remain at the same level 🔸 The pattern is completed when the price breaks below the horizontal support line 📍Rising Wedge 🔸 A bearish reversal pattern that forms with a series of higher highs and higher lows 🔸 The pattern forms as the price moves up in a narrowing range 🔸 The pattern is completed when the price breaks below the lower trendline 📍Triple Top 🔸 A bearish reversal pattern that forms with three peaks at the same price level 🔸 The pattern forms as the price reaches resistance at the same level multiple times 🔸 The pattern is completed when the price breaks below the support level, which connects the lows between the peaks 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Editors' picks
Education
by QuantVue
21