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Symmetrical triangles can be characterized as areas of indecision. A market pauses and future direction is questioned. Typically, the forces of supply and demand at that moment are considered nearly equal. Attempts to push higher are quickly met by selling, while dips are seen as bargains. Each new lower top and higher bottom becomes more shallow than the last, taking on the shape of a sideways triangle. (It's interesting to note that there is a tendency for volume to diminish during this period.) Eventually, this indecision is met with resolve and usually explodes out of this formation (often on heavy volume.) Research has shown that symmetrical triangles overwhelmingly resolve themselves in the direction of the trend. With this in mind, symmetrical triangles in my opinion, are great patterns to use and should be traded as continuation patterns. (Chart examples of symmetrical triangle patterns using commodity charts.) (Stock charts.)
Futures and options trading carries significant risk and you can lose some, all or even more than your investment. Stock trading involves high risks and you can lose a significant amount of money.
The information contained here was gathered from sources deemed reliable,
however, no claim is made as to its accuracy or content. This does not contain
specific recommendations to buy or sell at particular prices or times, nor
should any of the examples presented be deemed as such. There is a risk of
loss in trading futures and futures options and stocks and stocks options and you should carefully consider
your financial position before making any trades. The reference to
statistical probabilities does not pertain to profitability, but rather to
the direction of the market. The size and the duration of the markets move,
as well as entry and exit prices ultimately determines success or failure
in a trade and is in no way represented in these statistics. This is
not, nor is it intended to be, a complete study of chart patterns or technical
analysis and should not be deemed as such. |
