 The Best Forex Price Patterns - Trading TrianglesPublished Date: 2008-05-06 16:45:57 WorkOnInternet.com
Bullish Triangle Description: A bullish triangle is a symmetrical triangle that forms in the context of an upward trend. The triangle starts with a big upward move in the currency pair over a short period of time. The pair then proceeds to reverse lower, bounce higher, and continues to do so along converging support and resistance lines. The lines meet at the apex of the triangle, at which point the pair generally breaks higher. Nuances: The triangle itself is symmetrical and, in fact, neutral in terms of directional bias. It's only a bullish triangle if it occurs in the context of a bullish trend. It's very important that you're independently defining trend for when you come across situations such as triangles. Bullish triangles don't necessarily have to reach the apex before breaking. Oftentimes you will see bullish triangles break well in advance of reaching the apex. Application: A bullish triangle is confirmed once the currency pair breaks above the upper-end of the triangle, which is defined by the downward sloping resistance line. The price objective for the pattern is determined by adding the widest point of the triangle to the breakout point. The time horizon over which the price objective might be achieved can be approximated by measuring the time that the bullish triangle took to form. Bearish Triangle Description: A bearish triangle is a symmetrical triangle that forms in the context of a downward trend. The triangle starts with a big downward move in the currency pair over a short period of time. The pair then proceeds to bounce higher, reverse lower, and continues to do so along converging support and resistance lines. The lines meet at the apex of the triangle, at which point the pair generally breaks lower. Nuances: The triangle itself is symmetrical and, in fact, neutral in terms of directional bias. It's only a bearish triangle if it occurs in the context of a bearish trend. It's very important that you're independently defining trend for when you come across situations such as triangles. Bearish triangles don't necessarily have to reach the apex before breaking. Oftentimes you will see bearish triangles break well in advance of reaching the apex. Application: A bearish triangle is confirmed once the currency pair breaks below the lower-end of the triangle, which is defined by the upward sloping support line. The price objective for the pattern is determined by subtracting the widest point of the triangle from the breakout point. The time horizon over which the price objective might be achieved can be approximated by measuring the time that the bearish triangle took to form. Bullish and bearish triangles occur fairly often in the forex market across different timeframes. You can learn to trade triangles in a very precise manner by using point and figure charts, which are much more objective and precise than your traditional bar or candlestick charts. In fact, there are rules that help to precisely define triangles, when they break, and when to pull the trigger on a trade based on the pattern. Moreover, you can even use point and figure charts to project a price target based on the triangle. Visit http://www.fxpnf.com to learn more about point and figure charts and how to apply them to identifying and trading triangles in the forex market.
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