All about Symmetrical Triangle Pattern

What does the symmetrical triangle pattern signify?

The market's volatility contraction is reflected in a symmetrical triangle chart. This means that the volatility in the market is gradually shrinking, and could soon break out or collapse. This is when the share price consolidates in a way that creates two converging trendlines with closely aligned slopes. This chart pattern shows a continuous period of price consolidation, before it breaks down or breaks out. A new bearish trend begins when the lower trendline breaks down. Or, the breakout of the upper trendline could signal a new bullish trend.

What is a symmetrical triangular pattern?

A chart pattern with two trend lines converged such that they connect in a series peaks and valleys is called a symmetrical triangle or wedge chart pattern. The triangle shape is created by the convergence of both trend lines at an approximately equal slope. Both trend lines should converge at an equal slope if they become symmetrical. These lines are called an ascending triangle or descending triangular, respectively.

Visually, a symmetrical triangle pattern looks different to a descending or ascending triangular pattern because both the lower and upper trend lines of the former slope towards a central point. Ascending triangles, on the other hand, have a horizontal upper trendline that predicts a higher breakout. A descending triangle shows a horizontally inclined lower trendline. This indicates a potential lower breakout. To be called a symmetrical triangle pattern, the lines must be approximately equal in their convergence slope.

Trading experts agree that the best way to determine if a symmetrical triangle has been identified is to look at the trendline's duration. It is important to determine whether the trend has been seen for days or months in order to confirm if it is a symmetrical triangular pattern or just temporary flats or pennants. If the pattern is observed for several months, it is more likely to be symmetrical. It is most likely a pennant, or flag, if it is only a few weeks old.

How can you infer the breakout price using a symmetrical triangular pattern?

To estimate the breakpoint or breakout price point, traders use the distance between the low and the high of the first section of the pattern. Let's take, for example, the symmetrical triangle patterns that begin at Rs10.00 and move up to Rs15.00 as the range narrows. If the breakout is seen at Rs12, it would indicate a target price for Rs17. The underlying formula for the price is Rs15 -- Rs10 = Rs5 + Rs12 = R17.

It is also helpful to estimate a breakout point so you can decide where to put your stop loss. In a symmetrical triangle chart pattern the stop loss is usually placed just before the breakout point. To minimize losses, traders will often place their stop loss below Rs12.00 if the share mentioned above breaks out. Importantly, it is important to remember that symmetrical trading works best when other technical indicators or patterns are considered.

Trade Tips Using a Symmetrical Triangle

Technical analysis using symmetrical triangles works best when combined with other chart patterns. Symmetrical triangles patterns are used by traders to look for high volume movements in share prices so that they can confirm the breakout. You can also use other indicators to estimate the breakout's duration. To determine when a security is overbought following its breakout, RSI (or the'relative strengths index') can be used with symmetrical triangular technical analysis.

To trail stop loss, traders also use moving averages with a symmetrical triangular chart pattern. A trailing stop loss technique is not the only option. Traders also often use price projection techniques when using technical indicators like symmetrical triangles. Here is how price projection works. Find the distance between the lowest point and the highest point of the symmetrical triangular design. This is the width. This is the width. This is the price projection point.

Conclusion

- A symmetrical Triangle Chart Pattern occurs when the share price consolidates so that it generates two converging trendlines with roughly equal slopes.

- The distance between the points at which the initial low and the initial high were applied is equal to both the breakdown targets as well as the breakout targets for asymmetrical triangles.

- Traders combine symmetrical triangles with other technical analysis tools to confirm their predictions about breakout points.