The symmetrical triangle chart pattern forex trading strategy is based on the symmetrical triangle chart pattern which is mostly considered a continuation chart pattern.
What this means is that, this chart pattern can be either or bullish (refer to chart below):
So when you see a symmetrical triangle chart pattern is formed on the chart, it indicates a period of consolidation in a trend and after that, the trend resumes.
The symmetrical triangle chart pattern forex trading strategy is also a price action trading strategy which means you really don’t need to use any indicators at all with it, but just the ability to recognize the chart pattern when its forming and then take trades on it.
Currency Pairs: Any
Forex Indicators: you don’t need any
The symmetrical triangle chart pattern is formed by converging of two lines (refer to chart below):
- the converging resistance line
- & the ascending support line.
The breakout tends to happen in the prior trend direction.
Symmetrical triangle chart patterns can be very profitable when you trade the breakouts that happen either downwards or upwards.
THE KEYS TO SUCCESSFULLY TRADING THE SYMMETRICAL TRIANGLE CHART PATTERN
These are the two important things you need to be able to trade the symmetrical triangle chart patterns successfully:
- know what you are looking for and being able to spot the symmetrical triangle as it is being formed
- get in at the right time when it breaks out of the triangle.
CHARACTERISTICS OF SYMMETRICAL TRIANGLE CHART PATTERN
- The two trendlines drawn in the formation of the triangle should have similar slope at a point know as the apex.
- The price will bounce between these trendlines towards the apex.
- The breakout as most times will happen about 3/4 of the way towards the apex
- The breakout often happens in the direction of the original(prior) trend
- So when you see a symmetrical triangle pattern formation after a downtrend, the you should expect a breakout below the ascending support line.
- When you see a symmetrical triangle pattern formation after an uptrend, you should expect that price would breakout of the descending resistance line.
- A break in the opposite direction of the prior trend indicates a formation of a new trend.
SYMMETRICAL TRIANGLE CHART PATTERNS FOREX TRADING STRATEGY TRADING RULES
Here’s how to trade the symmetrical triangle chart pattern:
- Wait and watch for a candlestick to breakout of the triangle pattern. This candlestick must then close outside the descending or ascending trendline.
- Once this candlestick closes, depending on which side the candlestick closes, you either place a buy stop/sell stop order 2-5 pips from the closing price of that candlestick.
- Set your take profit target equal to the “pattern height.”(refer to chart above for pattern height, if you don’t know)
- For stop loss you have couple of options here:
- If you placed a buy stop order, place your stop loss anywhere from 10-30 pips (this depends on what time frame you are using to get into this trade) under the low of the candlestick that broke out of the triangle chart formation OR…you can place your stop loss on the other side of the triangle chart formation…that is if you were to take a sell trade, where you could have placed your sell stop order then this is where you place your stop loss. Stop loss placement on this area is quite effective as you would have less chance of being stopped out prematurely.
- Or you can place is at halfway point between the descending and ascending trendlines just right where the breakout happens.
- if you place a sell stop order, place your stop loss 10-30 pips above the high of the candlestick that broke the triangle pattern.
- when your trade is in profit and is halfway towards hitting its profit target, you can move stop loss breakeven to minimize your risk
- or you can take half of the profits and leave the other half running.
- also continue to lock your profits by moving your stop loss and trailing it behind higher swing lows as price moves upwards to your profit target(this is for a buy order). Do the opposite for sell order: move stop loss for each lower peak that forms until your take profit is hit.
ADVANTAGES OF THE SYMMETRICAL TRIANGLE PATTERN FOREX TRADING STRATEGY
- the symmetrical chart pattern is usually a very explosive breakout chart pattern. if you catch the breakout at the right time, profits come fast.
- its based on price action and there is really no need to add any other indicator so you should learn to keep it simple as it is without complicating it too much.
- the symmetrical chart pattern happens in all timeframes, so regardless of what timeframes you are trading, they do happen frequently especially in the much smaller timeframes like the 1min to the 30minute timeframes.
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