In any financial market, as well as in the forex market, this figure is formed. To build a triangle, you need at least 4 points: 2 highs and 2 lows.
There are several types of triangle:
1) Ascending triangle: its shape is directed upwards. The resistance line is usually located horizontally or with an upward slope.
2) Descending Triangle: The shape of the pattern is downward. Bottom line that is resistance, either horizontal or sloping downward. The breakdown of such a triangle is mainly done downward.
3) Symmetrical triangle. When plotting it, the trend lines are directed towards each other. The trend lines in this triangle are directed to the center of the pattern. As a rule, a breakout is made towards the continuation of the trend.
The essence of the strategy:
1) The entry point is determined by the breakdown of the trend line in any direction. The best option is to pull back from the broken trend line of the pattern in question. The third option is to update the low or high of the last extreme of the triangle.
The best points to enter the market will be when the breakout occurs in the first 2/3 of the triangle. You should be careful if a breakdown occurs in the remaining 1/3 of the pattern, as there are many false breakouts.
2) When setting take – profit, the main goal is the length of the widest part of the pattern, which is postponed from the breakout level of the triangle.
You can also draw a parallel line to the directly opposite side of the breakout of the triangle. The result is a parallel channel.
3) A stop loss order is usually placed on the opposite side of the triangle