Triangle Pattern Trading

Minimum 2 touches per trendline (4 total). Ideally 3+ per line. More touches make the pattern more reliable because it shows price is respecting those levels multiple times.

Wait for the close beyond the trendline. Intraday pierces often reverse. A close beyond the line shows conviction. You can enter on the close of the breakout bar or the next day's open.

Typically 3 weeks to 3 months for daily charts. Shorter than 2 weeks may be a pennant (similar but smaller). Very long triangles (> 3 months) can lose energy and be less reliable.

Yes. Ascending triangles break down about 25-30% of the time; descending break up similarly. Symmetrical can go either way. That's why stop losses are essential.

For longs, place stop below the most recent swing low inside the pattern, or below the pattern low. For shorts, above the most recent swing high or pattern high. You can also use 2 ATR from entry.

Triangles have converging lines sloping opposite directions (or one flat). Wedges have both lines sloping the same direction. Rising wedge = both rising (bearish). Falling wedge = both falling (bullish).

After breakout, price sometimes pulls back to test the broken trendline. If it holds (doesn't close back inside), it's a successful retest offering a second entry with tighter stop. Enter on the bounce.

On Balance Volume (OBV) can hint at direction. If OBV rises during formation (making higher highs), it suggests accumulation and likely upside breakout. Falling OBV suggests distribution and downside.

Breakouts in the final 1/3 before the apex are most reliable. Too early may be premature. At or past the apex often fails. Also, breakouts with expanding volume and in the direction of the prior trend are more reliable.

Standard target = pattern height from breakout. Extended target = 1.618 × pattern height (Fibonacci). Use extended targets when breakout is strong with momentum and volume.

Define rules: identify swing highs/lows, check if highs are descending (or flat), check if lows are ascending (or flat), verify convergence, measure duration. Can be coded but requires swing point detection first.

Pre-breakout: buy straddle expecting volatility expansion. Post-breakout: buy calls/puts in breakout direction. Can also sell iron condors during formation and close before breakout.

When a sharp move (thrust) precedes a triangle, measure that thrust. After the triangle breaks out, the target is often the thrust's size repeated. Thrust = flag pole equivalent.

Limit to 4-6 concurrent triangles. Diversify across sectors. Risk 1-2% per trade. Prioritize pattern types: ascending in uptrend first, then descending in downtrend, then aligned symmetrical.

Failures often due to: low volume breakout, counter-trend pattern, breakout at/past apex, news events. Reduce failures by: requiring volume confirmation, trading with trend, avoiding apex breakouts, checking news calendar.