Triangle Patterns
Triangles
provide one of the most useful price pattern
indicators. The odds favour a continuation of
the trend following a breakout from the triangle
pattern.
Overview
- When the top
and bottom trendlines form a triangle a
valuable indicator is formed, often forecasting
a sharp subsequent movement when the price
breaks out.
- The wider the
price fluctuations within the triangle,
and the longer the triangle pattern holds,
the greater the following price change.
- Good triangles
are an intermediate pattern, taking from
one to three months to form.
Triangle
patterns usually form part way through a strongly
trending move and represent a congestive phase
in the marketplace. These patterns are important
because they are typically followed by sharp
increases or declines in price. An established
triangle pattern is a valuable signal prior
to a relatively predictable price change.
The vertical
line measuring the height of the pattern becomes
the base of the triangle. The apex is the point
of intersection where the two lines meet. There
are typically 3 common types of triangles -
symmetrical, ascending, and descending:
