Symmetrical Triangle

What is a Symmetrical Triangle

A symmetrical triangle is a chart pattern characterized by two joining trend lines interfacing a series of sequential peaks and troughs. These trend lines ought to merge at a generally equivalent incline. Trend lines that are uniting at inconsistent inclines are alluded to as a rising wedge, falling wedge, ascending triangle, or descending triangle.

Symmetrical Triangles Explained

A symmetrical triangle chart pattern addresses a period of consolidation before the price is forced to breakout or breakdown. A breakdown from the lower trendline marks the beginning of another bearish trend, while a breakout from the upper trendline demonstrates the beginning of another bullish trend. The pattern is otherwise called a wedge chart pattern.

The price target for a breakout or breakdown from a symmetrical triangle is equivalent to the separation from the high and low of the earliest part of the pattern applied to the breakout price point. For instance, a symmetrical triangle pattern could begin at a low of $10 and climb to $15 before the price range limits after some time. A breakout from $12 would infer a price target of $17, or $15 - $10 = $5, then + $12 = $17.

The stop-loss for the symmetrical triangle pattern is many times just below the breakout point. For instance, if the previously mentioned security breaks out from $12 on high volume, traders will frequently place a stop-loss just below $12.

Symmetrical triangles contrast from ascending triangles and descending triangles in that the upper and lower trendlines are both slanting towards a center point. Interestingly, ascending triangles have a horizontal upper trendline, foreseeing a potential breakout higher, and descending triangles have a horizontal lower trendline, foreseeing a potential breakdown lower. Symmetrical triangles are additionally like pennants and flags here and there, yet flags have up slanting trendlines as opposed to meeting trendlines.

Similarly as with most forms of technical analysis, symmetrical triangle patterns work best related to other technical indicators and chart patterns. Traders frequently search for a high volume move as confirmation of a breakout and may utilize other technical indicators to decide how long the breakout could last. For instance, the relative strength index (RSI) might be utilized to decide when a security has become overbought following a breakout.

Real World Example of a Symmetrical Triangle

The following chart shows an illustration of a symmetrical triangle pattern in Northwest Bancshares (NWBI):

In this model, Northwest Bancshares is shaping a symmetrical triangle that could go before a breakout. The price target for a breakout would be $19.40, or $17.40 - $15.20 = $2.20, then, at that point, + $17.20 = $19.40. The stop-loss would be $16.40 for a breakdown or $17.20 for a breakout.

Highlights

• Symmetrical triangles happen when a security's price is merging in a manner that produces two uniting trend lines with comparable slants.
• The breakout or breakdown targets for a symmetrical triangle is equivalent to the distance between the initial high and low applied to the breakout or breakdown point.
• Numerous traders utilize symmetrical triangles related to different forms of technical analysis that act as a confirmation.