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What Are Triangle Patterns?

A triangle pattern is a chart pattern formed by trendlines along a converging price range. These technical analysis tools supply swing traders with future price actions and a potential resumption of the current trend. They usually represent a continuation signaling that the former trend will last after a breakout.

There are 3 types of triangle patterns: symmetrical, ascending, and descending.

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How Can I Use Each of the Triangle Patterns?

Bullish Symmetrical Triangle

A bullish symmetrical triangle is depicted by two tightening trendlines, a descending upper one and an ascending lower one. It shows that neither the buyers nor sellers have control over the current movement. Before moving into the consolidation period, there is an uptrend. This trend continues after the price breaks through the upper trendline.

Swing traders may buy the breakout to take profits and set a stop order at the recent swing low to exit in case of a reversal. In the example below, the price starts to move in the opposite direction shortly after a swing high on 08/15. A pre-set stop order can stop more losses.

Ascending Triangle

An ascending triangle consists of a flat upper trendline and a rising lower trendline. The flat upper trendline functions as a resistance level which indicates the buyers have been unable to break through. The rising lower trendline with higher lows shows the selling power is weakening and the buyer may take over in the future.

Similar to the strategy of a bullish symmetrical triangle, investors may enter a long position at the breakout and consider placing a stop order at the last swing low.

Descending Triangle

The descending triangle has an inverse formation as the ascending triangle. It is likely that a downtrend will go on since sellers are more aggressive than buyers and lower highs emerge.

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Heading for a profit from a falling market, swing traders tend to enter a short position at the breakout.

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The Bottom Line

Though triangle patterns may favor traders in technical analysis, it’s not guaranteed that a market will move in a predicted direction. They are references to what a price might do next. Swing traders may mix chart patterns and indicators for double confirmation to reduce risk.

Data disclaimer: Technical analysis data and indicators are provided by Trading Central. Trading Central is a separate entity, unaffiliated with Webull Financial. Webull is not responsible for the accuracy or completeness of data provided by Trading Central. All data are provided for informational purposes only, and are not intended, and should not be construed, as investment advice or recommendations.