A triangle is a technical analysis pattern formed by trendlines connecting lower highs and higher lows, resulting in a symmetrical pattern. A breakout above or below the trendlines indicates a continuation of the pre-existing trend. Symmetrical triangles represent indecision or consolidation in the market. An ascending triangle forms in an uptrend and is considered bullish, while a descending triangle forms in a downtrend and is seen as bearish. Fibonacci extensions use key Fibonacci ratios to project potential support and resistance levels beyond standard retracement levels.
A triangle is a technical analysis pattern formed by trendlines connecting lower highs and higher lows, resulting in a symmetrical pattern. A breakout above or below the trendlines indicates a continuation of the pre-existing trend. Symmetrical triangles represent indecision or consolidation in the market. An ascending triangle forms in an uptrend and is considered bullish, while a descending triangle forms in a downtrend and is seen as bearish. Fibonacci extensions use key Fibonacci ratios to project potential support and resistance levels beyond standard retracement levels.
A triangle is a technical analysis pattern formed by trendlines connecting lower highs and higher lows, resulting in a symmetrical pattern. A breakout above or below the trendlines indicates a continuation of the pre-existing trend. Symmetrical triangles represent indecision or consolidation in the market. An ascending triangle forms in an uptrend and is considered bullish, while a descending triangle forms in a downtrend and is seen as bearish. Fibonacci extensions use key Fibonacci ratios to project potential support and resistance levels beyond standard retracement levels.
A triangle is a technical analysis pattern formed by trendlines connecting lower highs and higher lows, resulting in a symmetrical pattern. A breakout above or below the trendlines indicates a continuation of the pre-existing trend. Symmetrical triangles represent indecision or consolidation in the market. An ascending triangle forms in an uptrend and is considered bullish, while a descending triangle forms in a downtrend and is seen as bearish. Fibonacci extensions use key Fibonacci ratios to project potential support and resistance levels beyond standard retracement levels.
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TRIANGLE
What Does Triangle Mean?
A technical analysis pattern created by drawing trendlines
along a price range that gets narrower over time because of lower tops and higher bottoms.
Technical analysts see a breakout of this triangular
pattern as either bullish (on a breakout above the upper line) or bearish (on a breakout below the lower line). Symmetrical Patterns Symmetrical triangles are thought of as continuation patterns developed in markets that are, for the most part, aimless in direction. The market seems listless in its direction. The supply and demand therefore seem to be one and the same.
During this period of indecision, the highs and
the lows seem to come together in the point of the triangle with virtually no significant volume. Investors just don't know what position to take. However, when the investors But,doif you areout figure looking whichfor an to way entry takepoint the issue, it following headsanorth symmetrical or southtriangle, with bigjump volume in into comparison the fray at the breakout to that of thepoint. indecisive days and or weeks leading up to the breakout. Nine times out of ten, the breakout will occur in the direction of the existing trend. Ascending Triangle Pattern An uptrend is in place and the demand line, or lower trendline is drawn to touch the base of the rising lows. The two highs have formed at the top line. These highs do not have to have reach the same price point but should be close to each other.
Often a bullish chart pattern, the ascending triangle
pattern in an uptrend is not only easy to recognize but is also a slam-dunk as a entry or exit signal.
It should be noted that a recognized trend should
be in place for the triangle to be considered a continuation pattern.
Most analysts will take a position once the price action breaks through the top line of the triangle with increased volume, which is when the stock price should rise an amount equivalent to the widest section of the triangle. Descending Triangle Pattern The descending triangle pattern is the upside-down image of the ascending triangle pattern. The two lows on the chart form the lower flat line of the triangle and, again, have to be only close in price action rather than exactly the same.
The descending triangle is recognized primarily in
downtrends and is often thought of as a bearish signal.
The development of the descending triangle takes
the same amount of time as the ascending triangle, and volume again plays an important role in the breakout to the downside. Leonardo Fibonacci was an Italian mathematician born in the 12th century. He is known to have discovered the "Fibonacci numbers," which are a sequence of numbers where each successive number is the sum of the two previous numbers.
e.g. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.
These numbers possess a number of interrelationships, such as the fact that
any given number is approximately 1.618 times the preceding number.
Fibonacci Numbers/Lines
Interpretation of the Fibonacci numbers in technical analysis anticipates changes
in trends as prices tend to be near lines created by the Fibonacci studies. The four popular Fibonacci studies are arcs, fans, retracements, and time zones. Fibonacci Extensions Levels used in Fibonacci retracement to forecast areas of support or resistance. Extensions consist of all levels drawn beyond the standard 100% level and are used by many traders to determine areas where they will wish to take profits. The most popular extension levels are 161.8%, 261.8% and 423.6%.
In practice, most traders use Fibonacci
extensions in combination with other technical indicators/patterns to help them determine appropriate target prices. As this chart shows, the 161.8% level is often used to set the price target on a breakout of an ascending triangle. This specific target is calculated by multiplying the vertical distance of the triangle by the key Fibonacci ratio of 61.8% and then adding the result to the upper resistance of the triangle.
