Triangle pattern: ascending, descending, or symmetrical

Triangle is a widely recognised chart pattern defined by two converging trend lines. This article will teach you how to spot different types of triangles and which trading strategy to apply for each of them after the breakout.

  • Time to read: 4 min
  • Updated: 29/03/2024

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What is the triangle pattern?

The triangle chart pattern is formed by two converging trend lines drawn along a narrowing price range. There are three types of triangles: ascending, descending, and symmetrical.

You can easily tell different types of triangles apart by looking at the slope of the trend lines:

  • horizontal upper line, diagonal lower line—ascending triangle pattern
  • diagonal upper line, horizontal lower line—descending triangle pattern
  • both upper and lower lines are diagonal—symmetrical triangle pattern.

To choose an effective trading strategy, you must first define the type of a triangle correctly.

Triangle is not to be confused with the expanding triangle pattern. Two converging lines form triangles, whereas an expanding triangle is constrained by two diverging lines resembling a megaphone. The latter can be difficult to exploit, especially for novice traders, and require a special approach.

What does the triangle pattern indicate?

A valid triangle indicates an opposition between buyers and sellers. It means traders are unsure of which way the market is going to move. Triangles often appear before the release of important news.

The triangle pattern is considered a continuation pattern. However, a false triangle signifies a strong trend reversal. That means you should be very careful when trying to identify and confirm this pattern.

How do you identify the triangle pattern?

Triangles occur on all timeframes for any asset, including Forex pairs, stocks, and cryptocurrencies. They can appear in any market context regardless of the preceding trend direction.

A valid triangle usually includes at least five touches of support and resistance. Look for a consolidation on the chart and then wait for several touches to confirm it.

Ascending (bullish) triangle pattern

An ascending triangle forms when a narrowing trading range repeatedly touches a certain resistance level and then breaches it. A strong upward trend follows the breakout, finishing this bullish pattern.

The psychology behind the ascending triangle pattern is that some buyers patiently wait for the breakout, placing higher bids. Once the pattern gets confirmed, more buyers rush in, pushing the price up.

Descending (bearish) triangle pattern

A descending triangle is the opposite of the ascending type. The price repeatedly touches a support level before collapsing through it. A strong downward trend follows, finishing this bearish pattern.

The psychology behind the descending triangle pattern is simple: sellers place ask orders for lower prices as the range narrows. After the breakout, more sellers enter, pushing the price further down.

Symmetrical triangle pattern

A symmetrical triangle has two diagonal trend lines with no clear support or resistance levels. It can break in any direction, so it can turn out to be a bullish or bearish pattern depending on the outcome.

The symmetrical triangle is the most frequent type of the triangle pattern. When neither buyers nor sellers can push the price in their direction, any sharp movement will start a new strong trend.

How do you use the triangle pattern for trading?

To successfully exploit a pattern, you must correctly identify it and then wait for the breakout. Once it gets clear which way the price is moving next, enter the market using the appropriate strategy.

While some outcomes are more probable than others, the breakout can occur in both directions, so it is important to confirm any type of the triangle pattern. To be sure, look for a spike in trading volume and skip a couple of candlesticks or wait for a retest to confirm the forming trend.

Ascending triangle pattern trading strategy

A valid ascending triangle probably indicates an upward trend, so prepare to buy the asset.

  1. After the pattern forms, wait for a breakout indicating the bullish trend.
  2. If the price breaks out downwards, place a Sell order with a Stop Loss above the last maximum.
  3. If the price breaks out upwards (as expected), place a Buy order with a Stop Loss below the last minimum. You can also wait for additional confirmation, such as a retest from above, to be sure.
  4. Set your Take Profit above the triangle at the level equal to its height.

Descending triangle pattern trading strategy

A valid descending triangle probably indicates a downward trend, so prepare to sell the asset.

  1. After the pattern forms, wait for a breakout indicating the bearish trend.
  2. If the price breaks out upwards, place a Buy order with a Stop Loss below the last minimum.
  3. If the price breaks out downwards (as expected), place a Sell order with a Stop Loss above the last maximum—or wait for additional confirmation.
  4. Set your Take Profit below the triangle at the level equal to its height.

Symmetrical triangle pattern trading strategy

A valid symmetrical triangle can break out in any direction, so be careful.

  1. After the breakout, enter the trade immediately or wait for additional confirmation, such as a retest.
  2. If the price breaks out upwards, place a Buy order with a Stop Loss below the last minimum. Set your Take Profit target above the triangle at the level equal to its height.
  3. If the price breaks out downwards, place a Sell order with a Stop Loss above the last maximum. Set your Take Profit target below the triangle at the level equal to its height.

Key takeaways

  • The triangle pattern usually predicts a strong trend, but it can move in either direction
  • Look for a consolidation with a narrowing price range within two converging trend lines
  • Ascending triangles are mostly bullish (Buy), descending triangles are bearish (Sell)
  • Wait for a retest, a sharp volume increase, or an obvious trend to confirm the pattern
  • Prepare to set your Stop Loss and Take Profit levels for various breakout scenarios
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