The basic strategy of trading a symmetrical triangle is to patiently wait for a breakout, then enter on the breakout or retest of the pattern. To enhance this strategy, we can wait for a bigger volume increase to confirm the breakout direction of the pattern. A symmetrical triangle pattern occurs when an asset makes equally wide movements up and down, eventually concentrating into a small area. When viewed on a technical price chart, smaller trends give shape to an isosceles triangle, or symmetrical triangle – hence the name of this pattern.

An upside breakout would indicate that price is going to rally higher, this is called a bullish breakout. Conversely, a downside breakout indicates that price is going to fall, this is a bearish breakout (break down). Another attribute is that the symmetrical triangle should have two bullish and two bearish reversal points at the trend lines, giving it at least four touchpoints. As always, it is important to wait for confirmation of the pattern and the trade’s game plan; this pattern is no different. Confirmation of a symmetrical triangle breakout is needed for it to be considered valid. Two points are needed to form a trend line, and 2 points are needed to form a symmetrical triangle.

Bullish Symmetrical Triangle Pattern

Symmetrical triangle indicates that the trend will probably continue, when the pattern appears during an upswing and the price moves upward. The symmetrical triangle pattern is a useful tool for traders and analysts looking to spot potential trend reversals or continuations and properly manage risk. Traders increase their chances of success by making better trading selections by comprehending the traits of the pattern and its implications for upcoming price movements. Symmetrical triangles are found in all time frames, and traders use them to spot potential trading opportunities for all different forms of assets like stocks, forex, cryptocurrencies, and commodities. Traders should understand and remember that not every symmetrical triangle pattern will lead to a major price movement .

The target measurement in that case will be applied from the lower border’s breakout rate. Fake-outs typically happen when a triangle forms near a significant how to trade symmetrical triangle support or resistance level. Most traders will expect the triangle to act as a continuation pattern, blindly following the breakout in the direction of the trend without context. Despite its versatility, a “Symmetrical triangle” pattern itself does not give an accurate indication of the existing trend continuation or a reversal.

Are symmetrical triangles always reliable for trading signals?

We need to work with the triangle parameters to calculate the triangle pattern height. By measuring the distance between the highest point formed within the Symmetrical Triangle and its lowest point, we obtain the triangle height. This means that before the Symmetrical Triangle Pattern forms, we need to have a prior trend (bullish). If the higher timeframe is in an uptrend, then chances are, the symmetrical triangle would breakout higher. Remember to set a stop-loss order within the body of the triangle to minimise potential losses.

• You can see that the drop was approximately the same distance as the height of the triangle formation.
• Triangle patterns differ from wedge patterns in their shape and slope of trendlines.
• This method maximizes profits from the predictable price swings while the market consolidates.
• Increased market volatility occurs when traders scramble to adjust their positions to align with the new market conditions.

Don’t make this BIG mistake when trading the Symmetrical Triangle, here’s why…

Symmetrical triangles can be bullish or bearish, depending on the preceding trend. This trend was bearish, so price action continued in a bearish direction. A rising wedge pattern formed, eventually becoming a large bullish symmetrical triangle breakout. For this to happen, an established trend should already exist; the trend should be at least a few months old. Symmetrical patterns form during a consolidation period; then, the breakout happens. It is important to remember that patterns can break down instead of doing what they are supposed to do.

The accuracy of the symmetrical triangle pattern in technical analysis is increased by combining it with other technical analysis tools, like Fibonacci retracement levels. When the price breaks out and retraces to a Fibonacci level, like 38.2% or 61.8%, it confirms the breakout’s validity. The statistics for the symmetrical triangle pattern include a 67% success rate in predicting breakouts. The symmetrical triangle pattern has a 55-60% probability of a bullish breakout and 40-45% for a bearish, according to Thomas Bulkowski’s Encyclopedia of Chart Patterns.

The Symmetrical Triangle Trading Strategy: Step by Step Instructions

• A symmetrical triangle pattern occurs when an asset makes equally wide movements up and down, eventually concentrating into a small area.
• If the higher timeframe is in an uptrend, then chances are, the symmetrical triangle would breakout higher.
• The upper trend line connects lower highs, while the lower trend line connects higher lows.
• Forex, stock, cryptocurrency and commodity traders use the symmetrical triangle pattern when anticipating breakouts, which are decisive price movements that occur once the price exits the triangle.
• Manage risk by trailing stops higher as the breakout continues and close out positions if prices fall back below the resistance level which should now act as support.

First, identify the chart pattern by spotting the converging trend lines, with one ascending and the other descending. The pattern should have at least two lower highs and two higher lows touching the trend lines. Finally, while the symmetrical triangle does not indicate the direction of the breakout, it reflects a period of equilibrium between supply and demand.

Example – Fantom (FTM) – Symmetrical Triangle Breakout – Bullish

Traders should use triangle patterns in conjunction with other technical indicators to mitigate false signals and enhance the pattern’s accuracy. The price of the asset either rises or dips after the breakout depending on the slope of the converging lines. The price volatility in the symmetrical triangle pattern declines with time, and the distance between the two trend lines gets smaller as the pattern develops. This convergence of lines suggests that supply and demand dynamics are aligning more evenly, which will lead to a price breakout. The following image clearly depicts the price movement between the converging lines of a symmetrical triangle pattern in technical analysis.

After identifying the right breakout, you then need to define the target and risk of the trade. Traders wait for a breakout to occur and then enter a trade in the direction of the breakout. Once identified, look to take short positions on a breakdown below support, confirmed by increasing volume. Filippo Ucchino has developed a quasi-scientific approach to analyzing brokers, their services, offers, trading apps and platforms. He is an expert in Compliance and Security Policies for consumer protection in this sector. Filippo’s goal with InvestinGoal is to bring clarity to the world of providers and financial product offerings.

Once you spot the triangle pattern, wait for the breakout to occur, which could happen in either direction. The triangle does not need to look “perfect”, but the lines should converge fairly symmetrically. Triangle patterns can provide great trading opportunities but require know-how to trade them properly which is why I decided to share some advanced trading tricks to gain an edge with triangles. Set initial stop loss orders just outside the opposite side of the triangle. Increase positions on confirmed breakouts beyond the upper or lower trendline on expanding volume. There are three primary types of triangles that tend to form in price charts – ascending descending and symmetrical.

What is the Importance of the Triangle Pattern in Trading?

The price fluctuates in a tightening range within the pattern, where the descending resistance line caps upward movement, and the ascending support line limits further decline. The best way to trade with a symmetrical triangle pattern involves a combination of patience and vigilance. Descending triangles, on the other hand, have a bearish breakout bias no matter what trend it occurs in. That means if a descending triangle appears in a prevailing uptrend, it is still biassed towards a bearish break in the price action.