Trading Symmetrical Triangle 101

This page will show readers the emergence of possible Symmetrical Triangle Patterns for Gold and Forex pairs, and how prices may move for the period.

Lower time frames will be our focus for today’s symmetrical Triangle analysis on XAUUSD.

 

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What is a Symmetrical Triangle?

A symmetrical triangle is a  Price Action Trading pattern that reveals a Ranging market condition, where converging, rising support and dropping resistance lines show equal buyer and seller equilibrium.

This pattern is usually a trend continuation pattern but once in a while, price tends to retrace a bit or reverse completely in direction negating the overall expected result of the formation of the Symmetrical triangle.

 

Major Characteristics of Symmetrical Triangles:

Pattern Formation: Symmetrical Triangles require aminimum of two lower highs and two higher lows, forming a tapering, balanced, triangle-shaped wedge.
Time of Formation: Often takes 5 to 12 hours to form on lower time frames and can take between 3 weeks to 3 months to form on higher timer frames, indicating a significant, short term or long term price range.
How Price Breaks out: A 3% price move outside of the trendlines is a normal indicator of a true breakout. Traders often wait for the Retest of the Trendline before placing trades. Not all breakouts are geniune.

The Right Way to Trade Symmetrical Triangles:

Your Entry Area: Patiently wait for a clear price breakout and retest above the resistance/Supply area (for a bullish trend) or below the support/demand area (for a bearish trend).
Volume matters: Increased trading volume around the breakout area will also confirm the strength of such breakouts.
Take Profit Level: Draw a line to measure the height of the triangle at the widest part (the base) usual at the left side of the pattern to the breakout point.

Stop-Loss: Place stop-losses just inside the opposite trendline or based on recent volatility (e.g., Average True Range).

Conclusion: Not all breakouts are true when analyzing the Symmetrical Triangle Pattern, and watch out for false breakouts or Judas Swings.

Extra care must also be taken when analyzing Symmetrical Triangle as traders sometimes confuse Symmetrical Traingles with Ascending or Descending triangle.

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Support and Resistance