Day trading forex with triangle patterns

Article Written By: abetworth

Forex traders applying technical analysis believe triangle patterns demonstrate that neither bulls nor bears can move the price in a sustained direction. This implies that some form of equilibrium is therefore evident. At the beginning of its formation a triangle is at its widest level. When a market carries on trading in a consolidating range the price action compresses and the point of the triangle is defined.

So looking at it from a basal level the triangle constitutes both forex buyers and sellers running out of strong impulse momentum to advance the trend in their required direction. There are multiple different triangle patterns that can be traded in forex as follows:

The ascending triangle model shows the bulls gradually pushing price into a resistance line and the bears neglecting to push price lower as time comes about. This can be seen with the higher lows which form during an ascending triangle. It is only normal that in time selling force will fall often in these scenarios.

Symmetrical triangle consists of two trend lines with a lowly support trend line and an upper resistance trend line. There is no especial bias on a symmetrical triangle unless the market has applied another indicant of where it wants to go. This could be a heavy trend or a price action candlestick setup etc. This integration of price action often leads to strong momentum when the upper or lower trend line is broken.

The triangle breakout is often akin to an inside bar breakout which is what we ought expect given the laws of similarity (price curling tight before breaking away from a range and order flow building etc).

Descending triangle patterns are ideally encountered in a downtrend and are believed to be a bearish signal. A descending triangle is the upside-down picture of an ascending triangle pattern.

In liquid forex markets order flow constructs around well shaped triangles and they can furnish good breakout trading opportunities. The breakout itself can be played with or without confirmation. The best triangle setups from my perspective have confluence with price action giving a leading indicant as to wherever price will go.

Volume analysis alike plays a significant part in building a genuine breakout but I do not presently use volume when trading forex due to the lack of centralised data. Volume is useful for all breakout trading and gives another useful indicator regarding the markets willingness to break away from an area.

For a Triangle profit target price projection. Assess the initial A B swing within the triangle and project a target from wherever price leaves behind the triangle for a potential target. In my experience these targets are best used when united with other technical analysis ways. If profit projections are not hit the balance of the projection can often be hit on the opposite side of the triangle.

As with all trading entries I prefer to adhere the most liquid times of the day to enter.

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