Advanced Lesson 08 Symmetrical Triangles Trading Strategy

Pattern Recognition and Market Interpretation – Tools and Techniques

When using the symmetrical triangle pattern for trade decisions, you need to go much deeper under the surface level price movements to uncover the important information. The pattern is made up of progressively smaller swings, which form sequential peaks and troughs that converge towards an apex. The idea is to prepare for a breakout, which typically occurs before the price fully compresses into the apex. In most cases, if the triangle appears during an existing trend, the breakout will continue in the direction of that trend, known as a continuation breakout. Reversals can suddenly happen, too, so you must be alert to these and watch out for any unexpected changes.

There are certain risk dynamics that the symmetrical triangle patterns have, and it’s important for you to understand them before you begin using them. The symmetrical triangle may appear simple, but it carries significant risks if not managed properly. Because breakouts can occur in either direction and the market may sometimes give false signals, you need a framework to protect your capital. Volume analysis is a great tool for you to use in the symmetrical triangle strategy. A breakout is far more credible when accompanied by a noticeable increase in volume. Volume indicators such as On-Balance Volume (OBV), Chaikin Money Flow (CMF), or basic volume histograms help validate the breakout’s strength.

Learning how to distinguish real breakouts from fake breakouts is another part of the symmetrical triangle strategy. Fakeouts can lead to quick reversals, which can trap you on the wrong side of the market, something with which you need to avoid. To prevent this from happening, you should wait for the price to break out and then retest the triangle boundary before entering—a technique called confirmation. The best way of preventing this from happening is to set yourself a stop-loss. These are typically placed just outside the triangle on the opposite side of the breakout. For example, if you’re trading an upward breakout, the stop-loss is placed just below the lower trendline. This prevents a significant loss in case the breakout fails or reverses sharply.

In this course, you will learn about all of the above symmetrical triangle strategies and their many uses in trading. You identify clean and valid triangle patterns for calculating price targets, setting effective stop-losses, and using volume for confirmation, and every step will be broken down clearly. In addition, you will learn how to protect yourself from the many common traps like fakeouts, and how to execute trades with confidence using a disciplined, rule-based approach. You will learn all of this and more and have a complete, professional-level understanding of how to trade symmetrical triangles successfully in the forex market and beyond.