Related Tutorial On Technical Analysis
Learn Triangle Chart Pattern
Triangle patterns are another very common chart patterns and owing to its easily interpretable shape , they are very easy to spot. Depending on of how the pattern is formed and where the pattern is formed, its reliability and possible breakout can be ascertained. The longer the pattern the better is reliability of its breakout. From bulls and bear tussle perspective, this pattern shows that neither party is giving up and the stock price squeezes to a very narrow range. High volatility and market indecision normally leads to formation of triangle pattern. Though there are many kinds of pattern but reliability of following patterns is higher.
In this case the upper price is constant (at a good resistance) and lower price keeps on moving towards upper price.
In this case of descending triangle, the lower price of stock is constants (near strong support) and upper price is making lower lows.
In this case both upper price and lower price are converging towards each other.
Spotting reliable triangle formation.
Each of the trend line(leg) should have at least two bounce from Support Basics and Resistance Basics. The more the better reliability. In other words, the upper line (resistance) should be formed with at least two points and similarly lower trend line should have at least two points. Volume during pattern formation is lower then normal volume but it should not dry completely. This signifies a strong fight between bulls and bears. Each of them not giving up and pressure building continuously. And in case of breakout , pressure releases in form a strong movement in the the direction of breakout.
On breaking down this pattern , it is an additional supporting factor over and above a simple trend-line resistance/support. Therefore this can also be viewed as an additional confirmation of trend-lines for those who trade solely on trend-lines.
Aggressive trader anticipate the breakout early and keep a strict stop loss, while conservative traders wait for confirmation of break out.
Now we have understood what Triangle pattern is. Now its time to look into some of the
most commonly formed triangle patterns. We have categorized them into following categories. Please follow these links to find about these patterns. We have explained them in details and provided you with ample real life examples of them.
Our website provides free Stock screening based on Different Triangle Pattern. It can be found at below link:
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(All analysis is based on End of Trade day's Value. Expected time of update is between 5 to 5.30 PM exchange time Zone)