Triangle Chart Patterns

Triangle patterns are well-known chart patterns within the field of technical analysis. They exist in different formations, bullish, bearish or symmetrical.

All triangle patterns have in common that the price moves in an increasingly narrow price channel until the price breaks out of the pattern up or down. Once that happens, the pattern is complete.

Technical investors use these breakouts to take positions. In the case of the ascending and descending triangle formation this is usually in the direction of the previously existing trend, therefore both these patterns are considered continuation patterns.

The symmetrical triangle pattern can be either a continuation pattern or a reversal pattern.

During the formation of the pattern, the volume will typically be lower, the price moves within the boundaries of the pattern. A true breakout from the pattern is characterized by a sudden uptick in trading volume. This is evidence that many traders recognize the pattern and act accordingly.

The Ascending Triangle

Characteristics:

• Horizontal resistance line at the top
• Rising trend line at the bottom
• At least five points of contact distributed along the horizontal and trend line
• Continuation of the existing uptrend as soon as the breakout occurs above the horizontal resistance line
  
  

The Descending Triangle

The pattern has the following characteristics:

• Horizontal support line at the bottom
• Descending trend line at the top
• At least five points of contact distributed along the horizontal and trend line
• Continuation of the existing downtrend as soon as the breakout occurs below the horizontal support line
  
  

The Symmetric Triangle

Characteristics for this pattern:

• Rising trend line at the bottom
• Falling trend line at the top
• At least five points of contact divided between the rising and falling trend line
• A breakout above the upper trendline is bullish and a further upward trend is assumed
• A breakout below the lower trend line is bearish, a further negative price trend is assumed.
  
  

Related Articles

More detailed information about the various individual triangle formations can be found here:

• The Ascending Triangle
• The Descending Triangle
• The Symmetric Triangle
  
  

Related video

• The Triangle Chart Pattern
  
  

The ChartMill Team