Forex Swing Trading Strategy #10:(Symmetrical Triangle Pattern Trading System)

The symmetrical triangle pattern trading system is based on the symmetrical triangle- mostly considered a continuation pattern. When a symmetrical triangle pattern is formed on the chart, it indicates a
period of consolidation in a trend and after that, the trend resumes.

The Symmetrical Triangle chart pattern is a really effective chart pattern that you can use for swing trading.

 

Symmetrical Triangles Chart Patterns

 

 

 

 

 

 

 

The symmetrical triangle pattern is formed by converging of two lines:

  1. the converging resistance line
  2. & the ascending support line.

Symmetrical triangles can be either bullish or bearish: if a symmetrical triangle forms after an uptrend, this is considered bullish. If a symmetrical triangle forms after a downtrend, this is considered bearish. The breakout tends to happen in the prior trend direction.

Symmetrical triangles can be very profitable when you trade the breakouts that happen either downwards or upwards.

THE KEYS TO SUCCESSFULLY  TRADING THE SYMMETRICAL TRIANGLE CHART PATTERN

These are the two important things to be able to trade the pattern successfully:

  • know what you are looking for and being able to spot the symmetrical triangle as it is being formed
  • get in at the right time when it breaks out of the triangle.

Symmetrical Triangle Chart Pattern Trading

CHARACTERISTICKS OF SYMMETRICAL TRIANGLE PATTERNS

  1. The two trendlines drawn in the formation of the triangle should have similar slope at a point know as the apex.
  2. The price will bounce between these trendlines towards the apex.
  3. The breakout as most times will happen about 3/4 of the way towards the apex
  4. The breakout often happens in the direction of the original(prior) trend
  5. So when  you see a symmetrical triangle pattern formation after a downtrend, the you should expect a breakout below the ascending support line.
  6. When you see a symmetrical triangle pattern formation after an uptrend, you should expect that price would breakout of the descending resistance line.
  7. A break in the opposite direction of the prior trend indicates a formation of a new trend.

 

HOW TO TRADE THE SYMMETRICAL TRIANGLE CHART PATTERNS

Here’s how to trade the symmetrical triangle pattern:

  1. Wait and watch for a candlestick to breakout of the triangle pattern. This candlestick must then close outside the descending or ascending trendline.
  2. Once this candlestick closes, depending on which side the candlestick closes, you either place a buy stop/sell stop order 2-5 pips from the closing price of that candlestick.
  3. Set your take profit target equal to the “pattern height.”
  4. For stop loss you have couple of options here:
  • If you placed a buy stoporder, place your stop loss anywhere from 10-30 pips (this depends on what timeframe you are using to get into this trade) under the low of the candlestick that broke out of the triangle chart formation OR…you can place your stop loss on the other side of the triangle chart formation…that is if you were to take a sell trade, where you could have placed your sell stop order then this is where you place your stop loss. Stop loss placement on this area is quite effective as you would have less chance of being stopped out prematurely.
  • Or you can place is at halfway point between the descending and ascending trendlines just right where the breakout happens.
  • if you place a sell stop order, place your stop loss 10-30 pips above the high of the candlestick that broke the triangle pattern.

 

Trading The Symmetrical Chart Pattern

 

HOW TO MANAGE YOUR TRADE THAT IS IN PROFIT

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

ADVANTAGES OF THE SYMMETRICAL TRIANGLE PATTERN TRADING SYSTEM

  • the symmetrical chart pattern trading system is usually a very explosive breakout swing trading system. if you catch the breakout at the right time, profits come fast.
  • its based on price action and there is really no need to add any other indicator-keep it simple.
  • the symmetrical chart pattern happens in all timeframes

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