The symmetrical triangle chart pattern is considered as a continuation chart pattern that forms in the shape of a triangle. What this means is this chart pattern can form in a bull market or a bear market. Although symmetrical triangles are regarded as a continuation pattern in the direction of a long-term trend but they can mark the end of the current trend as a reversal pattern given the right context.

Characteristics Of  The Triangle Chart Pattern :

• Resistance and Support trend line – There needs to be two points at the top to from a resistance level using a trend line. Two points at the bottom to the support level.
• Apex – The lines will converge into what is called the apex. Price will form higher lows and lower highs in the case of an uptrend as price narrows in range.
• Breakout of resistance – The rule of thumb is in an uptrend; break out of resistance is expected.
• Breakout of Support – In a down trend, support level break is expected.
• Actual break – We don’t know for certain which ways it will break so need confirmation of an actual break before trading it.
• Important rule: Fading the break when price is close to the apex is often times a losing play. While it may be a false breakout, the odds are a break with momentum will continue in the direction of the break.

The symmetrical triangle chart pattern trading strategy is also considered as a price action trading strategy which means we really don’t need to use any indicators at all with it, but just the ability to recognize the chart pattern when it’s forming and then take trades on it.

Keys to Trading the Symmetrical Triangle Pattern :

Two important things to trade the symmetrical triangle chart patterns successfully:

• Symmetrical Triangle formation can happen anyplace on the chart but look for a momentum thrust in the direction of the trend as first “on alert” signal.
• If an uptrend is found for example a lower high and higher low form, start looking for the second point to draw a trend line.
• Profit target can be a measured move; take the largest zone of the triangle and project it from the area of the break near the apex to give a price target for profit taking.

Trade with the Symmetrical Triangles :

• Wait and watch for a candlestick to breakout of the triangle pattern on any time frame although higher time frames have better results. The candlestick must then close outside the descending or ascending trend line.
• After the Candlestick closes, depending on which side the candlestick closes, either place a buy stop/sell stop order 2-5 pips from the closing price of that candlestick.
• Set take profit target equal to the “pattern height.”( refer to the above chart )

Setting stop loss order :

• If we placed a buy stop order, place stop loss anywhere from 10-30 pips(this depends on what time frame is used) under the low of the candlestick that broke out of the triangle chart formation OR…place stop loss on the other side of the triangle chart formation…that is if we were to take a sell trade, where we could have placed our sell stop order then this is where we place stop loss. Stop loss placement on this area is quite effective as we would have less chance of being stopped out prematurely.
• Place it at halfway point between the descending and ascending trend lines just right where the breakout happens.
• If Sell stop order is placed then place stop loss 10-30 pips above the high of the candlestick that broke the triangle pattern.

Trade Management :

• When trade moves in profit and is halfway towards hitting its profit target, move stop loss break even to minimize risk.
• Or you can take half of the profits and leave the other half running which is known as trailing stop.
• Also continue to lock profits by moving stop loss and trailing it behind higher swing lows as price moves upwards to profit target (this is for a buy order). Do the exact opposite for sell order: move stop loss for each lower peak that forms until take profit is hit.

Pros :

• Profits come faster if breakout is caught at the right time thus the symmetrical chart pattern is a very explosive breakout chart pattern.
• No indicator is needed
• Very easy to follow
• Can be used in Any time frames as The symmetrical chart pattern happens in all time frames, so regardless of what time frames are trading, they do happen frequently especially in the much smaller time frames like the 1 min to the 30 minute time frames.

Cons :

• False breakouts are possible .
• There is always a chance that price moves sideways for an extended period of time or even moves higher.