What Are Technical Analysis Triangles

In technical analysis , it is considered that when a triangle is formed, it is a graphical configuration announcing the break up. It reflects the behaviour of investors late or hesitant at the start of an upward trend. From the time the first buyers have anticipated and taken a position to make a higher profit-taking, resistance stops the progression of the course because once the price level is reached, the owners of the title took the opportunity to make their capital gains, causing a shutdown of the increase.

But when the price comes down a bit, late comers rush to buy, thus reviving the bullish momentum. Increasingly anxious, fearful not to take advantage of the increase, they expect to buy less and thus cause the appearance of an upward sloping support line that forms the bottom of the triangle. There are two ways to enjoy this triangle formation. In both cases, the prudent investor will wait for the release of the triangle to be placed so that the speculator will buy on the bottom support and benefit of moving to increase the resistance to strengthen its position.

The experience gives the user of Technical Analysis with two possible objectives for an output increase of triangle consolidation: the first objective, the extended height of the triangle is small but warrants a first profit-taking as the second objective more distant as equal to the height of the rise postponed the previous triangle, is rarely achieved. In all cases, the lower triangle is a level of invalidation to place a stop-losslimits the potential loss to an acceptable level due to turn bearish always possible. The risk is known and the objective of saving him is much higher.

Finally, it should be noted that during the formation of a triangle, the greater the angle is large, and the fragility of the movement forming this angle will be fragile and by inference, the greater the angle is small, and the constituting force this angle will be solid. Thus, the triangles are usually figures of indecision materializing an inability of buyers and sellers to direct current. They are represented by support and resistance that converge, unlike the bevels, the lines of a triangle are oriented in opposite directions. Moreover, a rule that applies to any triangle, is that it remains valid until the courts have not reached 75% of the figure. Different figures of triangles:

The triangle down a descending triangle is represented by a straight horizontal support and resistance obliquely downward. The figure is slightly tilted to the downside, it is best to keep an eye on the seller rather graphic. Therefore, it is a bearish continuation pattern. Besides, one of the characteristics of triangles descendants is that there are two methods to determine the objectives. Indeed, we can use the technique of static goals and objectives that dynamic.

We agree that the case of static targets is not ambiguous. However, it is possible that dynamic targets are less easy to assimilate. Clearly, it suffices to draw the parallel with the resistance until the first down. This new right is now the goals.

The real interest of these methods is best that we can combine them. Indeed, only the static targets give you an indication of distance, and dynamic targets, they provide an indication of speed. You have understood, in combination, we obtain the unknown which is the time, in this case one can know how far prices will go and when.

The ascending triangle keeps the same properties as the triangle down except that in this case, the support is upward sloping and horizontal resistance. Therefore it remains a figure that meant to be broken at the top.

How to play these figures

the triangles are continuation patterns that give the opportunity to take a current trend. a sort of triangle with return of volumes before the last third of the configuration gives a buy signal quite popular with the Chartists stop usually located inside the triangle .

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