SYMMETRICAL TRIANGLE EXPLANATION:

Bullish or Bearish?

DEFINITION:

A symmetrical triangle in trading is a chart pattern formed by two converging trend lines, where the upper trend line is declining and the lower trend line is rising. This pattern indicates a period of consolidation and uncertainty in the market, as the price action is contracting into a smaller range.

Here are some key points to consider when identifying a symmetrical triangle:

1. Formation: The pattern forms when the price action is bounded by two converging trend lines, with the upper trend line connecting a series of lower highs and the lower trend line connecting a series of higher lows.

2. Symmetry: The trend lines should be symmetrical, meaning that they converge at a similar angle.

3. Consolidation: The pattern indicates a period of consolidation, as the price action is contracting into a smaller range.

4. Breakout: The price action will eventually break out of the triangle, either to the upside or downside.

5. Target: The target for the breakout is typically the height of the triangle, measured from the breakout point.

6. Confirmation: Wait for a confirmation candle or a close above/below the trend line to enter a trade.

7. Stop loss: Set a stop loss at the opposite trend line or a recent swing high/low.

Symmetrical triangles can be bullish or bearish, depending on the direction of the breakout. A bullish symmetrical triangle forms in an uptrend and breaks out to the upside, while a bearish symmetrical triangle forms in a downtrend and breaks out to the downside.

EXAMPLE :

Here is a simple illustration of a symmetrical triangle chart pattern:

B

/ \

/ \

/ \

A-----/-------\-----C

\ /

\ /

\ /

D

In this chart:

- A is the starting point of the triangle

- B is the first high

- C is the breakout point

- D is the first low

The two converging trend lines (upper and lower) form the triangle shape, indicating a period of consolidation. The price action will eventually break out of the triangle, Bull or Bear