Triangle Pattern

The triangle pattern is divided into three main types: the symmetrical triangle, formed by a descending upper line and an ascending lower line that gradually converge, which is considered a neutral pattern that can break out in either direction; the ascending triangle, formed by a horizontal upper resistance line and an ascending lower support line, typically viewed as a bullish continuation pattern; and the descending triangle, formed by a horizontal lower support line and a descending upper resistance line, typically viewed as a bearish continuation pattern.

The triangle pattern is characterized by a gradual contraction in the price range as the two lines converge, reflecting indecision and a temporary balance between buyers and sellers before one side resolves the deadlock through a clear breakout beyond one of the pattern's boundaries, often accompanied by a notable surge in trading volume.

The widest point at the base of the triangle is used to estimate the potential price target following a breakout by projecting that vertical distance from the breakout point. It is generally advisable to wait for an actual breakout rather than attempting to anticipate its direction beforehand, especially with a symmetrical triangle, which carries no inherent directional bias.

Common mistakes include entering trades before the pattern is complete or the breakout is confirmed, as well as falling for frequent false breakouts that often occur near the apex of the triangle, where trading volume naturally dries up as the lines converge.