Trading Symmetric, Ascending, and Descending Triangle Breakouts

Summary

This tutorial explains how to identify symmetric, ascending, and descending triangles from converging or partly horizontal trendlines connecting at least two swing highs and two swing lows. It treats all three forms similarly: wait for price to cross a boundary, then use the breakout direction as the trade signal. Because continuation formations are described as more common, the tutorial suggests favoring breakouts aligned with the prevailing trend while still treating an opposing break as a possible warning of trend deterioration.

For risk management, it places a stop just beyond the opposite side of the pattern. A projected target comes from the triangle’s base height, added to the breakout level for an upside move or subtracted for a downside move; the height is measured between the base swing high and low. The tutorial notes that breakout levels depend on subjective trendline placement. It asserts that the setup’s reward-to-risk ratio is favorable, but provides no empirical evidence, and pattern outcomes remain uncertain.

Key ideas

• Triangles form as successive price swings narrow between converging or partly horizontal boundaries.
• A breakout above or below the pattern supplies the directional trade signal.
• Continuation breakouts aligned with the prevailing trend are presented as more common, though countertrend breaks may signal a shift.
• Stops are placed just outside the opposite boundary from the breakout.
• The target estimate projects the pattern’s base height from the breakout point, but trendline placement is subjective.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.