Recognizing chart price patterns are an important aspect of technical analysis. The pattern act like a highlighter showing a potential trade. The triangle pattern is one of the most popular price patterns, because it is easy to recognize. It usually offers a good risk to reward ratio setup and some concrete price objectives. Symmetrical, ascending, and descending are the three types of triangle patterns. The reliability of these patterns is debatable, but all of them can be traded successfully. The symmetrical triangle pattern is formed by two intersecting trendlines of similar slope. These two lines are converging at a point called the apex. The coiling of the price that happens inside the triangle will eventually result in a breakout. The breakout can occur in any direction and the move is often as big as the base of the triangle. Ascending triangle pattern is easily recognized by a rising trendline intersecting with a flat resistance line.
It is often regarded by traders as a bullish pattern, because the price keeps bouncing of a resistance line that may eventually be broken. The descending triangle pattern is formed by a descending trendline intersecting with a flat support level. The repeated attempts of the sellers to push the price down can result in a breakdown through the support line. In all cases, the stop-loss can be placed beyond the opposite trendline. The stop-loss distance can be at least as big as the distance between the trendlines measured at the moment of the breakout. A good place to place the take-profit level is considered to be as far from the breakout point as the triangle base is wide. Choosing the take-profit distance a little smaller than the base width, if the risk to reward allows it, can increase the chances of price reaching it. These chart patterns have no predictive properties, but they may give hints about the forces involved in the market.
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