Triangle Chart Patterns On Forex

Triangle patterns can be found on any time frame on forex charts. These patterns are a continuation pattern, but sometimes they also show a reversal. They are so easy to recognize by their triangular shape, we will show you how you can trade them on foreign exchange market, because triangles has so many times giving us a good profit and loss ratio. There are three types of triangles that often occurs on currency market. They are ascending triangle, descending triangle and the last one is symmetrical triangle.

Ascending Triangle

This chart pattern indicates the strength of the bull market was in control at that time. The characteristic is the presence of higher lows but have the same level highs. Either on a down trend or up trend, if the horizontal line that act as the resistance penetrated, then the bull’s real strength may seem.

Ascending Triangle On An Up trend

If you see this pattern in an up trend, it is a sign of a continuation. Above is 1 hour chart of Euro/USD, the sloping up red line is the support line that connects the lows. And the horizontal red line acts as the resistance line. The best setup in a condition like this is to put your long stop order slightly above the resistance line. On 1 hour Euro/USD with 2 pips spread, usually i will place the long stop order 10 pips above the resistance. When you are getting more familiar with this pattern it is quite easy to practice. What you should notice is the “long stop order” point with respect to the spread you get from your forex broker. From the example above, the stop-loss point was about 60 pips and the greatest profit potential was 107 pips.

Ascending Triangle On A Down trend

If you see this in a down trend, it is a sign of a reversal. As you can see above, there are higher lows but it had the same level highs. On 1 hour chart Euro/USD with 2 pips spread,you may put your ‘buy stop order’ about 10 pips above the resistance line. On the simulation above, there are two stop-loss options, the first stop-loss is the safest one, and the second one is the aggressive stop-loss. The range from the lowest point to the resistance level was about 73 pips and the greatest profit potential was 125 pips.

Descending Triangle

On this chart pattern the bear is stronger than the bull at that time. The characteristic is the presence of lower highs but have the same level lows. Either on a down trend or up trend, if the horizontal line that act as a support penetrated, then it is obvious that the bear is the winner, who will roar loudly showing his domination.

Descending Triangle On An Up trend

Descending triangle on an upward trend is a reversal chart pattern. The Example above shows us a big downward movement after the price breached. As usual put your ‘sell stop order’ 10 pips below the support line or you can sell after the close of the candle that breached the support line. On the picture above i gave a yellow check sign to mark the first offender of the horizontal support. The first stop-loss option is the safest point and the second stop-loss is the aggressive one. The highest high to the support line was about 100 pips away, and the downward movement was 360 pips. What a beautiful bearish…

Descending Triangle On A Down trend

Descending triangle on a down trend is likely a continuation pattern. The another example above was a big time winner. The stop-loss was only 65 pips and the greatest profit potential was 250 pips, that’s almost  5 : 1 profit and loss ratio. On the above picture i gave you two entry options, the first one with a ‘sell stop order’ at the breakout and second one was at the bounce. Sometimes there will be bounces after the price breached the support line.

Symmetrical Triangle

The formation characterized with higher lows, but the price also makes lower highs. It is correlated to the market confusion, whether the bull or the bear will be the winner. While ascending and descending patterns are a child play to trade on forex. Not with this one, symmetrical triangle would be a reversal or continuation patterns, either in an up trend or in a down trend. You have to wait which line will breached, if the price breached down below(support) line, then the bear is the winner. If the price is breaking up(resistance) line , then the winner is the bull.

From the chart example above shows us a bullish explosion after the resistance level penetrated. I gave some yellow check sign to mark the possible entry that would be made, and I have also added a yellow line to describe the best possible stop-loss. Practice with a demo account first on your own forex trading platform, or you can combine with your own forex trading system then you can share your experience with me.

Conclusion :

Ascending Triangle is a bullish chart pattern. Descending Triangle is a bearish chart pattern. Symmetrical Triangle is a neutral chart  pattern, it can be bullish or bearish.