Triangles Candlestick Pattern

One of the most basic formations that technical analysts will use in the Forex markets is the triangle. The triangle is a representation of a tightening market, as both sellers and buyers are becoming more and more aggressive. Essentially what happens is that every time the market falls, the buyers step in a little earlier. On the other side of that coin, when the markets rally, the sellers step in quicker as well. Ultimately, this leads to the market tightening in range, and essentially forming a triangle over the course of time.

Triangle Formation

Triangle Formation

How to Trade Triangles:

As you can see on the chart above, but the buyers and sellers became more and more aggressive as time went on. This essentially means that inertia is building up in the marketplace, and it’s only a matter time before a decision is made. Once it is, the market typically will move rapidly in one direction or the other.

Note that this particular triangle is a symmetrical one, but there are also ascending and descending triangles as explained in our lessons. The symmetrical triangle doesn’t suggest either going higher or lower, just that we will make a decision soon.

Please keep in mind that the market should break out of the triangle shape before 80% of the triangle is completed. If we form a triangle and continue going sideways, that is more indicative of a market that is simply falling asleep. Notice on the trade below how we made a decision, and then took off to the upside.

Triangle in action.

Triangle in action.

Leave a Reply