In technical analysis found three types of triangle.
Ascending triangle (triangle ascelding) is a resistance line forms the top horizontal (or nearly horizontal) border (sides of triangle) and bottom side (side) of the triangle will have a support line with an upward slope. The amplitude of price fluctuations in the graph between the sides of the triangle (i.e. the lines of support and resistance) will be characterized by damping of the waves. It is believed that in most cases the result of the formation of this shape will be a break of the resistance line (upper side of the triangle), after which the price will go up to new heights. Above the upper side of the triangle set buy orders.
Descending triangle (descending triangle) – support line forms a horizontal (or nearly horizontal) the bottom side of the triangle, and the upper side of the imaginary triangle is a resistance line having a downward slope. It is considered that the result of the formation of a descending triangle is a penetration line support price movement.
Also, it is possible to meet the shape of the symmetrical triangle (symmetrical triangle). In this case, the result of the formation of this shape THAT will be an unpredictable turn of events – a price breakout will be up or down. Symmetrical triangle is a neutral figure, but there is a perception that a breakthrough is to be expected in the direction of the initial trend. For this reason, many establish order in the place of junction of the two parties, i.e. orders to buy above resistance and sell orders below the bottom side of the triangle.
Additions to the rules
1.Trading within the triangle is dangerous.
2.Expanding right triangle is a figure unfit for the game.
3.Breakthrough price movement must occur in the direction of the previous trend. Most likely the “coordinates” of the break points are located at a distance 1/2 to 3/4 the length of the triangle horizontally. If breakthrough has not occurred between these two points, the potential for breakthrough is the lost power is expected to be the soft output of price movement beyond the triangle and the presence of uncertain price movements in the aftermath.
4.On TA within the classical shape of the triangle must be at least 5 waves the number of waves must be odd.
5.There is a danger of a false breakout. It is not necessary at the first break of candlestick to enter the market with 100% certainty. You need to observe candlestick which has pierced the border of the triangle, focus on the closing price of the candle – if the closing price would be abroad of the triangle, then gradually you can open a position and expect further price movement in the direction of the previous trend. Otherwise, when the closing price of the candle will be inside the triangle shapes – about a breakthrough.
6.The most powerful breakthrough can be observed, when the last wave takes place before she touches the boundary of the triangle.
7.Should be a decrease in volume as price moves inside the triangle, and during a break, the volume increases very markedly. Often the prices after the break strive to get back to the border, then this return should occur on declining volume.
The definition of the goals to which to aspire price after the break
Measure the height of the widest part of the triangle, and after that lay is the distance from the breakthrough point.
In the case of determining the purpose of the triangle is broken up, through the top point of the base of the triangle hold the line parallel to the line of support. To determine the purpose of the triangle is broken down is carried out parallel to the line of resistance straight line passing through the bottom point of the base figure. These lines believe the minimum price point.