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Symmetric Triangle Forex Pattern

Triangles can be visualized as pennants with no poles. There are four types of triangles: symmetrical, ascending, descending, and expanding (broadening).

A symmetrical triangle consists of two symmetrically converging support and resistance lines, defined by at least four significant points. (See the Figure below).

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The two symmetrically converging lines suggest that here is a balance between supply and demand in the forex market movements. Consequently, a break may occur on either side. In the case of a bullish symmetrical triangle, the breakout occurs in the same direction, qualifying the formation as a continuation pattern.

The next Figure shows a diagram of a symmetrical bullish triangle. The the converging lines are symmetrical. The declining line is defined by points B, D, and F. The rising support line is defined by points A, C, E, and G. The price target is either (1) equal to the width of the base of the triangle BB', measured from the breakout point H (HH'); or (2) at the intersection of line BI (which is a parallel line to the rising line AG) with the price line. Trading volume will visibly decrease toward the end of the triangle, suggesting the ambivalence of the market. The breakout is accompanied by a rise in volume.

In the numerical example, the price objective is either 1.5500, as the difference between 1.5000 and 1.4000, measured from 1.4500 or 1.5300, as the difference between 1.5000 and 1.4000, measured from 1.4300.

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