A symmetrical triangle chart pattern is a period of consolidation before the price is forced to break out or down. A breakdown from the lower trend line marks the start of a new bearish trend, while a breakout from the upper trend line indicates the beginning of a new bullish trend.
The price target for a breakout or breakdown from a symmetrical triangle is equal to the distance from the high and low of the earliest part of the pattern applied to the breakout price point. For example, a symmetrical triangle pattern might start at a low of $10 and increase to $15 before the price range narrows over time. A breakout from $12 would imply a price target of $17 ($15 minus $10 equals $5, then plus $12 equals $17).
The stop-loss for the symmetrical triangle pattern is often put right below the breakout point. For example, if the security breaks out from $12 with high trading volume, traders will frequently place a stop-loss just below $12.
Symmetrical triangles differ from ascending and descending triangles in that the upper and lower trend lines slope toward a center point. In contrast, ascending triangles have a horizontal upper trend line, predicting a potential breakout higher, and descending triangles have a horizontal lower trend line, predicting a potential breakdown lower. prior movement.
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