Triangle chart patterns are important tools used in Forex trading. These trend lines are created when the lows and the highs of the candlesticks form triangle shapes on the forex charts. Continue reading to learn more about Forex Triangles.
In forex, the triangle patterns are often divided in three categories, the symmetrical, ascending and descending. The triangle shape is significant, but the path that the market takes after breaking from the triangle is even more important. While the triangles are reversal patterns at times, they are usually seen as continuance patterns.
The Different Forex Triangles
Symmetrical Triangle: Whenever the market makes higher lows and lower highs, this will create a symmetrical triangle. This triangle is generally connected to floating markets since the contraction of the range shows that the market is not controlled by the bears or the bulls. If you have an uptrend pattern this would be seen as a reversal pattern when the market breaks with a downside and a continuation pattern when it breaks to the upside. The patterns would switch around if a downtrend pattern is created.
Ascending Triangle: If the market makes higher highs and higher lows an ascending triangle will be created. In general, these patterns are seen in uptrend markets and are regarded as continuation patterns because the bulls have more gains and more control going upwards to the top section of the resistance line on the pattern. Even though this pattern is normally created in an uptrend market, you need to pay close attention to it if it’s created in a downtrend because it could act as a very powerful reversal indication.
Descending Triangle: Whenever the forex market makes lower highs and lower lows, a descending triangle will be created. You would normally see these patterns in a downtrend and they are viewed as continuation because the bears have more gains and control going downwards to the support line at the bottom of the pattern. You should pay attention if this pattern forms in a downtrend, because it could serve as a reversal signal.
It is important to mention that triangle patterns are easy to recognize on Forex chart, because they often take a while to create before the breaking out of the price action. Triangles are often created over a time period of 3 days to 3 weeks. These patterns usually take a longer time to form than the pennants or flags and they tend to form immediately after a significant move in the price.
Hopefully, this information will help you to understand more about Forex Triangles. Experienced traders usually trade price actions within the triangle boundaries, but this practice is too risky for beginners or inexperienced traders. If you are not familiar with these patterns, you can practice on the demo trading platforms to improve your skills.