Ascending, descending, symmetrical. When price converges toward a single point, what are participants waiting for? A triangle is a record of consensus dissolving.
A triangle is a pattern in which the price range narrows over time, the upper and lower boundaries converging toward a single point. As the chart moves rightward, the distance between highs and lows contracts — quite literally a triangle on the screen.
A triangle is consensus dissolving. During the prior trend, buyers and sellers were clearly divided. From some point on, their forces begin to balance; both sides' claims grow weaker. Range tightens, volume thins, the market holds its breath — and as the apex approaches, one side finally yields.
Three forms exist. The ascending triangle (a flat top, rising lows), the descending triangle (a flat bottom, falling highs), and the symmetrical triangle (both boundaries converging). The outlines look similar, but the psychology inside each differs in subtle ways.
How to Read
OANDA:USDJPY
Inside the triangle, volume contracts over time. Price convergence and volume contraction proceed together — this is the signature of a genuine triangle. Then, near the apex, the breakout is accompanied by a sharp expansion in volume. A breakout without volume should not be trusted.
Formula
Target after breakout = breakout point ± height of the triangle's base
Whether ascending or descending, project the height of the widest part (the base) from the breakout point. It will not always be reached exactly, but it is widely used as the first take-profit reference.
Place on the opposite side of the broken boundary, or near the centre of the triangle. If price is pushed back inside the triangle, treat the breakout as failed.
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