The Symmetrical Triangle is a chart formation that is also addressed as a coil and it is generally formed while the trend occurs as a continuation pattern. This pattern incorporates 2 lower highs and 2 higher lows. While the points get connected, then it forms a Symmetrical triangle by means of line coverage. Moreover the connectors remain wide in the start and it gets narrowed down at last. Although it is a trend continuation pattern, many reports have shown the importance of symmetrical triangle and even they play a dominant role in the trend reversals. They result with a continuation with the present market trend. Never mind whether it is reversal or continuation, the succeeding moves could be fairly discovered by means of a potential breakout.
Generally, price action within the triangle is usually identified by zigzag movements of three waves. This is better understood if one observes the following example:
Symmetrical Triangle Description
The symmetrical triangle is the most distinct chart pattern that is commonly implemented to make the market technical analysis by means of 2 converging trend lines. Basically this chart pattern is distinguished by depicting 2 trend lines which joins a series of both sequential higher and lower peaks. The higher and lower peak trend line serves as a barrier, which could protect the rate from moving higher or lower. While the rate breaches than the expected levels, the sharp movements usually continues often.
The symmetrical triangle chart pattern is considered as a consolidation time prior the rates moving up towards the expected trend lines. The break above the uptrend line describes the beginning of the move towards up while the break below the downtrend line describes move towards downward. When examining the market trend, expert traders will most commonly concentrate on the sharp volume increase and other indicators in order to substantiate a breakout over the trend lines. Remember, the symmetrical triangle chart pattern is quite hard to deal with, particularly newbie’s find it difficult in the beginning. But you can become acquainted with it out of little practice.
When the symmetrical triangle is forming, the market volume is usually behave as follows:
- The volume drops along the triangle.
- The volume is high during the rupture or perforation of one of the converging trend lines .
- In case there is one pullback, the volume must be low.
- When the price is approaching the price target, the volume increases again.
The take profit level of pattern is calculated by measuring the height of the triangle, ie the distance between the two trend lines taken from the start point. This distance extends from the point where the price pierces the training and gives us a minimum target of how far the trend will continue.
Note that sometimes the triangle can be used to buy and sell within its area. In an uptrend we should take as a point of buying the lower trendline logically and close positions in the upper trendline. In the case of a downtrend, we should open short positions in the upper line and close the positions in the line below.
The fact that we trade differently, depending on the type of market in which we are trading, is because we must trade in favor of the main trend. With a continuation pattern we should not try to guess the trend changes, as this can be expensive for us.
Example of the Symmetrical Triangle