Using Triangles in Technical Analysis
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Triangles are patterns formed by converging trend lines meeting at a single point, showing indecision in the market. There are three main types: ascending, descending, and symmetrical triangles. Triangles can indicate continuation or reversal of the pre-existing trend. Volume is generally low inside the triangle and increases at the breakout. Traders watch for breakouts of the trend lines and aim to enter positions in the direction of the breakout. Stop losses are placed outside the pattern to limit risk. Patterns like triangles can provide insight into market behavior but may not always work as expected.
Using Triangles in Technical Analysis
- 1. Using Triangles- in Technical Analysis By Sangamesh.K.S
- 2. Index • What are triangles & why they are formed? • Types of Triangles • How to trade triangles? • Placing Stop-Loss • Strategies for trading triangles • set price targets for triangles • EWT’s perspective of triangles • Using indicators & triangles • Do patterns really work? • Sleeping Triangles (An research and findings)
- 3. What are Triangles? Triangles are the patterns formed when upper and lower price level collide (converging trend lines) at a single point called Apex/cardle.
- 4. Facts about triangles • Triangles can be best described as horizontal trading patterns. • As the market continues to trade in a sideways pattern, the range of trading narrows, and the point of the triangle is formed. • The triangle shows losing interest in an issue, both from the buy side as well as the sell side: the supply line (support) diminishes to meet the demand.
- 5. Contd. • They have a tendency to repeat again and again. • Triangles indicates its direction before it give you a breakout.
- 6. Nature of Triangle • They consist of Trend Line Major Support/ Resistance • Volumes will be low before breakout; Volumes kick high after breakout. • Triangle speak its direction (Bullish/Bearish) • Price never touch the cardle/Apex.
- 7. When they are formed? • After a impulse wave; Triangles are corrective wave(As per wave) • When market start to move sideways. • Range bound Market; Triangles are anticipation of breaking S/R
- 8. Continuation Vs Reversal • As per pattern it is Continuation • As per EWT it is Reversal.
- 9. Types of Triangles • Ascending triangle • Descending triangle • Symmetrical triangle – Others
- 10. Triangles and parts of Triangles
- 13. An example where an Ascending triangle failed to give a bullish breakout!!!
- 19. Expanding Triangles • These Expanding triangles are the inverse(mirror image) of Regular Triangles • The volume in the expanding triangles increase • Hear trading within the triangle can be profitable.
- 21. Indicators and You • MACD • RSI • ADX etc • “It isn’t important which indicator is the best; but you need to know your indicator” • Tips: Keep an oscillator indicator and a moving average indicator. And keep experimenting to know more.
- 22. Stop-Loss • 2% or 5% Stop Loss • ATR • Pivot points And More • Fib Levels • Neckline • Trend line Before placing your stops. Keep an eye on “Risk” and “Volatility”
- 23. Premature Breakouts • They are the violation of Support/Resistance and Trend-line. • They stand as a road map for traders.
- 24. What we can understand from a with Premature breakouts? – We can predict the breakout( Bullish/ Bearish) • TIP: Stay away from the stock if the stock is showing violation in both upper and lower levels. Look for breakout for trading; They are the only reliable source
- 25. Triangles repeat again and again
- 26. Measuring Triangle There are 2 techniques adopted to measure the targets for triangle • Parallel trend-line method • Fibonacci Method
- 27. Elliott Wave Theory It consist of • Impulse wave • Corrective wave Zig-zag Correction Flat Correction
- 29. Flat Correction
- 31. What we learn from Elliott’s wave?
- 32. Do Patterns Work? Yes, Patterns work Really? NO
- 33. Why we think in Patterns? • Your pattern is based on our decision • Your decision is based on your thinking • Your thinking is based on your recognition.