Triangles often form as uncertainty fills the market, and traders are unsure in which direction is market moving.
Triangle are continuation patterns, represent lines of supply and demand.
But modern technical analysis is not limited by this narrow description.
There are three different types of triangles, Ascending triangle, the Descending triangle and the Symmetrical triangle.
Because of their similarities, we can add them, and growing or declining Wedge pattern.
If confirmed, the main application of the triangle pattern is to give price targets.
The direction the trend is determined by the direction of breakout.
An example of entry signals and exit target obtained using this this method.
Time frame a few weeks, max. profit over 1000 pips.
There are some basic validation rules.
1.The pattern upper and lower sloping trendlines must have at least two points of confirmation.
2. Volume usually decreases as the pattern progresses and increases at the point of breakout, forming wide spread candle.
3. Market (Closing price) "must" respect the pattern.
4.Closing price above the trendline in a bullish pattern and below the trendline in bearish chart pattern.
5.Strong pattern breake through the trend line in the first 2 / 3 of pattern.This is an indicator that we've written a few months ago,
one of the first indicators that I have help to write, One of the most valuable.
I did almost forget and lost It.