What are trade triangles?
Trade triangle is a type of pattern that traders developed to predict the price movement of a stock. When a stock forming these triangles, the stock is expected to make a move, whether positive or negative. It is extremely profitable if you recognize a stock forming these type of patterns.
Types of trade triangle
There are basically 3 types of triangle patterns in technical analysis: symmetrical, ascending, and descending. They usually represent continuation patterns.
Bullish Triangle Pattern
There are 2 types of bullish triangle patterns – symmetrical and ascending as demonstrated in the following figures:
Type 1 – Bullish Symmetrical Triangle
1. A stock is in an uptrend
2. It forms a symmetrical triangle
3. It breaks out from the triangle and goes higher
Type 2 – Bullish Ascending Triangle
1. A stock is in an uptrend
2. It forms an ascending triangle
3. It breaks out from the triangle and goes higher
Let’s look at some examples:
The figure below shows ENTG formed a symmetrical triangle in May. Soon after that, the stock went from 2.0 and peaked at 3.4 with a percentage gain of over 70%.
Here’s another stock (FEED) that formed a symmetrical triangle in April. The stock jumped from $2.5 a share to $8 in less than 3 months. That is a 220% gain in value.
Let’s look at a stock with an ascending triangle, TSL, which is a solar company I used to swing trade pretty often. The stock doubled in value from $14 a share to $28 in one month right after it formed an ascending triangle in May.
Bearish Triangle Pattern
There are 2 types of bearish triangle patterns- symmetrical and descending as demonstrated in the following figures:
Type 1 – Bearish Symmetrical Triangle
1. A stock is in an downtrend
2. It forms a symmetrical triangle
3. It breaks out from the triangle and goes lower
Type 2 – Bearish Descending Triangle
1. A stock is in an downtrend
2. It forms a descending triangle
3. It breaks out from the triangle and goes lower
Here’s an example of a descending triangle. The stock LGN formed a descending triangle pattern at the end of May. It was a declining stock and continued to drop when the pattern was forming. It declined another 20% in less than 2 weeks after the pattern was formed.
Trade Triangle Softwares
The MarketClub trading software is the best trading software in the market that utilize this technology and automatically find bullish stocks for you. There are a bunch of other trading features that this software offers, click here to see my review on MarketClub.
