The Triangle is a pattern that is created by a series of lower highs and higher lows. When the swing highs and lows are connected, the contraction in price is evident and that’s why it is also called Coil. Generally the volume pattern gives a hint if the pattern is acting as a Continuation pattern or a Reversal pattern. In 80% of the cases at least, it will act as a continuation pattern with the volume showing a downtrend inside the pattern. In an uptrend, Triangles are seen with the highs coming at the same level which are called Ascending Triangles. The Descending Triangle, seen in a downtrend, possesses lows at the same level.
Most Used Trends of Triangle Pattern
Advantages & Limitations of Triangle Pattern
The performance of the Triangles in any of the variations is not that good though the myth is strong. The performance improves a lot of the breakout volume is much higher compared to the volume inside the pattern. An Ascending Triangle is supposed to have a breakout on the upside and the Descending on the downside but a downward breakout for the Ascending is a much better performer and so is the case with an upward breakout for a Descending Triangle. The performance of the Symmetrical Triangle is not dependent on the direction of the breakout.