How to Read Triangle Patterns: Symmetrical, Ascending and Descending

What is a triangle pattern?

A triangle is a shape in which the range of price swings narrows steadily and the line joining the highs and the line joining the lows converge on a single point. Drawing a line takes two points, so a shape is usually called a triangle only when there are at least four turning points, that is, two highs and two lows. The point where the two lines meet is called the apex, and the widest part, where the triangle begins, is called the base. Triangles are divided into three types by the slopes of the two lines.

• Symmetrical triangle: highs get lower and lows get higher
• Ascending triangle: highs stay flat while lows get higher
• Descending triangle: lows stay flat while highs get lower
• If both lines slope the same way while narrowing, it is a wedge

A symmetrical triangle does not tell you the direction

A symmetrical triangle is a shape in which each high is lower than the last and each low is higher than the last. It is explained as buyers and sellers both backing off a little at a time, so the price range shrinks. Textbooks often classify it as a continuation pattern that resolves in the direction of the prior trend, but the shape itself carries no information about direction. As in the chart below, a symmetrical triangle after an advance can also break down. The direction is confirmed only after a close outside one of the two lines. A small symmetrical triangle that forms briefly right after a sharp move is called a pennant, and it is covered in the article on flag and pennant patterns.

Ascending and descending triangles

An ascending triangle is a shape in which the highs keep getting blocked at the same price while the lows rise steadily. It is read as meaning there are persistent sell orders at that price, but buyers keep stepping in at a higher price each time. A descending triangle is the reverse: price keeps finding support at the same level, but the highs keep coming down. Textbooks describe ascending triangles as tending to resolve upward and descending triangles downward, but they sometimes resolve the other way, so this too is only a possibility until confirmation. As in the article on drawing support and resistance, it is more natural to treat the flat side as a zone with some width rather than a single price, and the Support & Resistance Finder groups clusters of swings into zones for the same reason.

Volume and volatility shrink as it converges

Inside a triangle, volume is described as tending to shrink along with the price range as it narrows. The lower panel of the first chart mimics that. Because the candles move less, Bollinger Band width and ATR also move lower. If you use the Bollinger Band Squeeze Scanner to find coins whose bandwidth has narrowed, you will sometimes see a triangle-like shape on the chart as well. But lower volatility only means a large move may come; it does not say which way. Many explanations cite rising volume on the breakout as confirming evidence.

Measured target: the widest part, projected from the breakout

The most widely used measured target for a triangle takes the base, the widest vertical distance at the start of the triangle, and moves that amount from the breakout (or breakdown) point. In the descending triangle below, the height of 18 between the first high of 118 and the flat support of 100 is subtracted from 100, where support broke, giving 82. The height varies slightly depending on where you measure the base (at the first high, or where the two lines begin), so the target also differs from person to person. As in the head and shoulders and double bottom articles, this value is a reference that transfers the pattern's size; it does not mean price will reach it.

The convention that meaning fades near the apex

The classic explanation treats a breakout somewhere between half and three quarters of the way from the base to the apex as typical. If no breakout comes until price almost reaches the apex, the gap between the two lines gets so narrow that the slightest move carries price outside a line, and such an exit is seen less as the pattern's outcome than as price simply drifting out. So the convention is to treat a triangle that has run close to its apex as having lost its meaning and to read the chart afresh. This too is a convention born of experience, not a verified rule. In the narrow end, even small wobbles easily push a wick past a line before it returns inside; how to confirm with closes, retests and volume, and the cost of being late while you wait for confirmation, are covered in the article on breakouts and false breakouts.

Limits: everyone draws a different triangle

With triangles, the moment you choose which highs and lows to connect and whether to fit the lines to wicks or bodies, the shape and the breakout candle are decided, so different people get different triangles from the same chart. On past charts you draw the lines already knowing the breakout direction, so the pattern looks more reliable than it really is. The statistics this course measured directly do not include chart patterns, and outside success rates that cannot be verified here are not repeated. Reading a triangle as a shape that shows a stretch of shrinking volatility and its boundaries, and confirming direction by a close outside those boundaries, is about as much as can be said about this pattern with relative confidence.