The triangle is one of figures of the graphic analysis which is very often formed on price graphic. The cause of the triangles is often called an indefinite mood among the major investors. Often triangles arise in anticipation of the release of important economic news, after which is formed one or another trend. There are several types of triangles.
1. Symmetrical triangle.
Determine
the triangle on the graphic does not make special work. The location of
the price includes all 3 of the trend at the same time:
- decrease the maximum value, which characterizes the bear trend;
- raises the minimum value, which characterizes the bullish trend;
- with all this, the price varies slightly, which characterizes a lateral trend.
Fig.1. symmetrical triangle
That’s
why, this type of triangle is an exception from the rules. But the
trades are opened after the graphic crosses one of the limits of this
triangle.
An example of the transaction on sale:
figure 1 show a symmetrical triangle, which has been broken down.
Generally, the output prices beyond the triangle are accompanied by
increase of the volume, which in turn causes the pulse. Therefore the
transaction should be opened immediately after breakdown of the lower
bound. Technical stop is in this case is located for the upper line of
the triangle.
In the breakdown of the price of
the upper boundary of the triangle opens deal to buy. The breakdown
should also be accompanied by increase in volume. Stop after the opening
of the transaction is put for the lower bound of the triangle.
2. Ascending triangle.
This
triangle is characterized by consecutive increase of the minimum
values, but thus there is a certain price above which the graphic can't
leave. The graphic can limit by the ascending line below and the
horizontal at the top.
Fig.2. Ascending triangle
As
a rule, the price breaks the ascending triangle upstairs, i.e. mainly
considered as a buying. But there are cases, when the price breaks
through the bottom line of the triangle, in this case opens the deal on
the sale.
The example of opening of the
transaction is represented in fig. 2. The graphic is formed a triangle,
which broke through the top price. In this case opens the deal on the
purchase, it is also necessary to take into account the volume which
safety in the breakdown should noticeably increase. Stop located in the
lower bound of the triangle.
3. Descending triangle.
This
triangle is characterized by consecutive decreasing of the maximum
values, but thus there is such price below which the graphic can't
leave. The graphic can be limit by the downward line of top and a
horizontal bottom.
Fig.3. Descending triangle
As
a rule, the price breaks the descending triangle down, i.e. mainly seen
sale. At the breakdown by a triangle of the upper bound it is also
possible to consider transaction opening on purchase.
he
example of opening of the transaction is represented in fig. 3. The
graphic is formed by descending triangle. As soon as the price broke
through the bottom border, it should open a transaction on the sale. In
the breakdown, as a rule, it is necessary to increase the volume. Stop
is locates for the upper bound of the triangle.
General rules for trading on the triangle:
- the transaction is opened only after the breakdown of one or other of the boundary of the triangle;
- stop is located always for the line opposite to breakdown;
-
closing of the transaction is determined by the trader depending on the
current state of the market, it is possible to use a trailing stop.
