Triangle Pattern — Forex Trading — Chart Pattern

In this video, we will look at the triangle pattern. It is a very powerful, yet extremely simple formation in the forex market. So, we have here a hypothetical chart, that is kind of moving sideways. If we draw a line above and below, we will see right away that the price is in a triangle. The price can continue going in the triangle and more often than not, that is exactly what happens, the price keeps progressing in the triangle. Then there is nowhere to go. Now, the price shoots out, can go up or down depends on the situation. The outcome is often unpredictable. However, the fact is that the amplitude of the price movement is decreasing.

So, the market consolidates and all of a sudden, something happens. A movement picks up and it shoots out, either up or down. That is exactly what we will be taking advantage of. The triangle is also a very good pattern, since it can give us targets. By measuring the base of the triangle, and then copying this measurement at the place of breakout, then an aggressive target is exactly the size of the base. But is is always recommended to go with a conservative target.

In reality, we don’t know which way the price will shoot out. So, shall we buy or sell? This is the beauty of trading the triangle. In the forex market, you can set stop orders. So, instead of buying or selling, We are going to set two pending orders, one buy stop order, and one sell stop order. So, whichever way the price goes, we are going to earn a profit. As long as there is an impulse, it does not matter whether it is upwards or downwards, we can earn a profit from that. That is the massive advantage of technical analysis over fundamental analysis.

© Prabhu for Forex Videos, 2018. |
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