Education: Symmetrical Triangle

BITTREX:ADAUSDT   Cardano / Tether
36612 49
Hi traders!
It's been so long I haven't posted an educational post on Trading View... so I thought of posting a simple educational material that could be explained easily. The symmetrical triangle is one of the most commonly used patterns in trading and could be hugely profitable if used correctly.

So what is a "symmetrical triangle"?
The symmetrical triangle usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended, and the symmetrical triangle takes shape. Regardless of the nature of the pattern (continuation or reversal) the direction of the next move can only be determined after a valid breakout.

So here is how you can set the price target after a valid breakout. There are two ways to estimate the extent of the next move after the breakout.

1. The widest distance of the symmetrical triangle can be measured and applied to the breakout point (highlighted in purple).
2. A trend line can be drawn parallel to the pattern's trend line that slopes (up or down) in the direction of the break (highlighted in green).

Hope that helps, and it would be great if I can see some examples. Let me know if you have any further questions in the comment section below.
Thank you and have a great day!

Hi Abdulla,

A gem of an example of a symmetrical triangle here, I was just wondering if you know how to screen for these in tradingview? I love to trade these patterns but see them so infrequently
Good lesson. Thank you
Look's like ADA is shaking out the weak hands!
Can you tell us about Neo bro ?
Thank you for posting this idea; however, I think there are a few points not matching here ... first, as you said, those triangles form during a trend, and usually they will resolve in the direction of that trend; by the way the one pictured here looks like, it should break to the bottom, not to the upside thus the targets and the channel are not valid. Secondly, the price movement inside the triangles are either abcde or abc with either e or c being the breakout (on yours it would have been e. However, as another trader pointed out, those triangles can resolve to either up, down or sideways and is very difficult or risky to "gamble" on the very first sign of exiting the edges of the formation, as the price can do a 180 degree swing. Another point is that those triangles can also (and they actually do) appear at the end of the trends as well. In those cases, they become very difficult to trade or analyze properly, due to the volatility associated that occurs at those end-of-lines points. In this particular case, the volume is one of the best indicators about what kind of triangle it is ... trend continuation one or end of trend / reversal. When the volume diminishes towards the apex / tip, then usually it is a trend continuation one; however, when the volume increases at the tip, this most likely indicates a trend reversal one. The best way to double-check would be a trend indicator like RSI or ADX, on a longer time frame chart.
Just some thoughts :)
+9 回覆
@Haceru, Thank you for sharing your thoughts! The symmetrical triangle performs way better in a trend ( i totally agree) then a reversal pattern, so for example, if you have a bullish trend and you get the pattern with a breakout to the top, then the target is probably gonna reach with a win rate of almost 80-90%.

Regarding the breakout, regardless of the nature of the pattern (continuation or reversal), the direction of the next move can only be determined after a valid breakout. Adding to the wave structure of a triangle, this is a totally different topic, so I wouldn't want to discuss it and make things complex for other. But I do agree and here is an example of an ABCDE pattern.

Thanks again :)!
Have a great day.
+3 回覆
Haceru abdullatrader
@AAlFadhala, thanks ! ... in your opinion, what would be considered a valid breakout?
+1 回覆
@Haceru, So if we took Ripple chart as an example, the previous high (D) breakout would be a valid breakout. So generally a breakout from the previous high/lower high within the pattern. It all depends on your risk/reward ratio.
+1 回覆
Haceru abdullatrader
@AAlFadhala, thank you ... I have another example, just now ... BTC price, on the 4h chart just broke out of a symmetrical triangle , to the upside, and it did pass the D point. However, now is back to almost the tip level of the triangle. This is why I am cautioning about a very prudent approach towards those formations, since they are very tricky and can quickly turn into traps. Since this is an educational thread, I believe readers should see all sides of the story :)
+5 回覆
@Haceru, On a breakout, shouldn't the volume have went up tho? So, from my understanding by looking at the volume and seeing that volume is relatively low you could determine this was most likely a false breakout or as you called it a trap. Another possibility tho is that that trend line becomes new support and it rises after bouncing off the upper trend line.
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