Triangle pattern forex
Before we continue further on how to trade with triangle chart patterns in triangle pattern forex, it’s good to know in advance about what a triangle is?
In a technical analysis on forex trading, the triangle pattern is one pattern that is very popular among traders. This pattern usually signals a continuation of the old trend, and if you can recognize it, it can be very helpful in observing price action. What is a triangle pattern?
The triangle pattern described as a horizontal trading pattern. At the beginning of its formation, the triangle is at its widest position.
Then the trading range narrows as the market moves sideways. and that’s the points form a triangle are formed.
In the chart, the bottom line on the triangle pattern forex represents support, while the upper line of the triangle pattern forex represents overbought.
Where investors will draw profits.
There are three types of triangle patterns that are widely known by among trader,
- the ascending triangle
- the descending triangle
- and the symmetrical triangle.
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Ascending Triangle Pattern
An ascending triangle pattern is a triangle formation consisting of a strong resistance level and a slope line from low levels that meet at a point so that the pattern resembles a triangle. In this formation, the price appears to form higher lows and move closer to the resistance level.
In this condition, the seller stays at a certain selling price while the buyer buys at a higher price.
So that the price gets closer to the selling price.
If the buyer’s price is almost the same as the seller’s selling price, then the direction of price movements will immediately breakout or break one of the resistance levels or the low-level slope line.
In many cases prices maybe break the resistance level where buying sentiment is indeed stronger than selling sentiment so prices continue to rise and break the seller’s maintained level.
Especially if the situation before the formation of this pattern prices tends to move uptrend.
In this case, the triangle pattern shows a trend continuation.
But not infrequently the resistance level is too strong and the buyer cannot break the level.
This situation is due to the decreasing buy sentiment or the number of sellers increasing.
So that the price moves through a low slope line and then moves bearish.
Example Ascending Triangle pattern forex
In the picture above, we can see that an uptrend is going on.
The bottom trend line in the picture above follows support levels that continue to rise.
While the two high levels form the top trend line. The high level that forms the upper trend line does not have to reach the exact price level but must be close to each other.
At first, buyers in the market may fail to break the upper trend line and need time to try to break through that level, before finally being able to form a new high level.
Traders who observe this pattern can monitor trading volume as an indication that a new high level will be formed.
When a trader opens a position? most traders will open positions once price action breaks the upper line of the triangle along with an increase in volume.
Example Ascending Triangle and How to trades
In this pattern, we also cannot determine the direction of the breakout with certainty, but believe a breakout will occur.
So that it can take advantage by opening a buy stop position above the resistance level and sell stop position below the low-level slope line.
In the example above there is a breakout in the direction of the low-level slope line and the sell stop order is executed. Just like before, the target level or take profit in pip is determined by the height of the triangle (x).
Descending Triangle pattern forex
This pattern is the opposite of the ascending triangle. A descending triangle is a triangle formation consisting of a strong support level and a slope line from high levels that meet at a point so that the pattern resembles a triangle.
In this formation, the price forms lower highs and moves closer to the support level, which indicates a lower selling price while the buying price holds at a certain level.
When the seller’s selling price is almost the same as the buyer’s price.
Then the direction of the price movement will immediately breakout or breakthrough one of the support levels or the slope level high line.
Like as with the ascending triangle pattern forex.
In many cases, the price may be breaking the support level where selling sentiment is stronger than buying sentiment.
But not infrequently the support level is too strong and the buyer cannot break it due to the decreasing selling sentiment
Or the increasing number of buyers so the price moves through the high slope level and moves bullish.
Example Descending Triangle Pattern forex
The two low levels in the picture above form a support line on the triangle pattern.
Even in this pattern, the price points that form a low level do not have to be exact.
Large volume trading plays an important role in signaling a price breakout out of the triangle towards the bottom (bearish).
Example Descending Triangle Pattern and How to Trade
Just like the way of trading the previous ascending pattern.
We open long positions above the high-level slope line and sell stop positions below the support level.
In this example, there is a breakout in the direction of the high-level slope line so that the buy stop order is executed.
Just as before, the take profit level is determined by the height of the triangle (x).
Symmetrical triangle pattern
The symmetrical triangle pattern forex is a formation where the slope of the high levels and the slope line of the low levels meet at a point.
So that the pattern resembles an equilateral or symmetrical triangle.
In this formation, it seems that prices move to form lower high levels (lower highs) and higher low levels (higher lows).
In this case, the buyer and seller are in a consolidation time where the buyer buys at a higher price and the seller sells at a lower price.
iF both slope lines almost meet then the direction of the price movement will immediately breakout or breaks one of the two slope lines.
In this pattern, we cannot determine a definite breakout direction but believe a breakout will occur.
So we can take advantage of opening buy positions above the high-level slope line.
And sell positions below the low-level slope line, by pending buy stop and sell stop orders.
Example Symmetrical Triangle Pattern
In uncertain market conditions, high levels and low levels appear in two lines resembling funnels, without any significant changes in trading volume.
The investor does not know what position to take. Often, breakouts occur in the direction of an ongoing trend at a larger timeframe.
However, if you are looking for an entry point to open a position after the symmetrical triangle pattern is formed.
Then it is better to do so after the breakout point appears or it can also be with a pending buy stop and sell stop pending strategies.
Example Symmetrical Triangle and How to Trade
In the example image above there is a breakout in the direction of the high-level slope line so that the buy stop order is executed.
In this case, the sell stop order can be canceled immediately, it can be manually The target level or take profit in pip is determined by the height of the triangle (x) according to structure the market
Trading With Harmonic Pattern
Trading in a harmonic pattern is also a way of trading price action such as a triangle pattern. At first, it will seem complicated for beginners. But don’t worry, because this article will explore how easy it is to trade with a harmonic pattern, through the help of a few simple tools.
How To Identify Harmonic Patterns
The biggest problem in recognizing the formation of harmonic patterns lies in its complexity to measure the position of each point using Fibonacci Retracement. Each harmonic pattern has formation requirements. And for beginners may find it difficult to memorize even one pattern.
There are 6 types of the most popular harmonic patterns, namely; Gartley, Bat, Butterfly, Crab, Cypher, and Shark. All six patterns provide reversal signals with a high degree of accuracy.
An easy way to trade harmonic patterns by following these steps:
Find patterns with shapes such as the letter “M” or “W” on the chart.
This first step is easy if you are familiar with technical analysis techniques using Price Action. Take a look image below for an example.
Create a Retracement line on the first Swing using the Fibonacci tool.
Fibonacci retracement is the main requirement in forming harmonic patterns, if these conditions are not met, then the signal accuracy is not good.
The range of acceptable Retracement is between 38.2% to 78.6% of the first Swing. Below or above that range, the pattern cannot be used. let see the image below.
Finding basic pattern “ABCD”
The basic pattern of ABCD is the basic trade-in harmonic patterns. Fibonacci patterns will be complete when patterns in the form of a “parallelogram” are formed.
In the Cypher pattern, this unique pattern has ABCD characteristics that are formed from the first Swing. Unlike the Crab, Butterfly, Gartley, and Bat patterns whose ABCD patterns are only confirmed in the last Swing.
If the ABCD pattern does not form at all from point X to D (starting swing to end), then the signal harmonic pattern is invalid, except on the Shark pattern. The Fibonacci Shark pattern gets special treatment because it often does not contain the ABCD pattern at all.
Classification of Retracement requirements becomes conical to one of the harmonics patterns.
The Cypher pattern is easily distinguished by its uniqueness, namely the formation of the ABCD pattern at the start of Swing, and point A (Fibonacci extension 133%) is more prominent than point C.
Next, there are 5 other harmonic patterns. must be classified based on visual characteristics and Retracement conditions. From visual cues, you can see how harmonic patterns form “channels” during the formation fulfillment process.
The shark pattern is unique in its broad channel shape. Conversely, if the channel narrows, it might be included in the Fibonacci Gartley or Bat pattern. Whereas if the channel is almost parallel, it may be classified as Crab, Butterfly, or Cypher pattern.
Next, we back to the second step to identify more specific patterns. The following are the requirements for pattern identification criteria.
- If the channel is aligned and the first leg retracement is in the range of 38% to 61.8%, the pattern has the potential to become a valid Crab pattern.
- If the channel is aligned and the first retracement is> 61.8% and <78.6%, then the potential is the Butterfly harmonic pattern.
- Visually, the Cypher channel pattern turns away from the Crab/Butterfly pattern channel. For example, in the Bearish Crab/Butterfly pattern, the channel will sideways upward, but in the Cypher pattern, the channel sideways downward. Vice versa, if the signal bullish.
- If the channel narrows and the first Swing Swing is in the range of 38% to 50%, it is most likely the Bat pattern.
- The channel narrows and the first retracement> 50% and <61.8%. Potential to be a harmonious Gartley pattern.
Confirm the potential for harmonic pattern formation
After conical to one of the harmonic patterns, confirm its accuracy by checking all the requirements for forming the corresponding Fibonacci pattern. If the conditions are not met, the validity needs to be questioned.
For example, you have found a price pattern such as the letter “W” with the channel widened, so the price potentially forms the Shark pattern. But after being checked according to the terms of the Fibonacci Shark pattern. The pattern does not meet the criteria. If it is so, then the easy trading step harmonic pattern is not valid.
Repeat steps 1 through 5 as needed until you find a valid harmonic pattern
Might at first you still haven’t smoothly followed the easy trading steps in the above harmonic pattern. But over time, you will begin to feel the difference. No need to rely on memorization, no need to spend time checking harmonics patterns one at a time, and more importantly, you can immediately detect valuable trading opportunities.
Trading with triangle chart patterns is very good if we can discipline with rules trading
But of course, no perfect trading analysis, trading based with triangle chart patterns also like trading with another strategy.
We always need proper money management, and also about risk management very crucial in trading, to learn more about forex trading strategies actually there are so many sources out there, like as on babypips
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