Price break-out from a symmetrical triangle formation signals the direction of the market movements that follow

Chart type: Bar chart, candlestick

Applies to: Continuation

Significance: High

Symmetrical triangles are interesting formations, and one of the reason is they may provide forecasting information to the trader. These formations combine both ascending and descending trendlines. While ascending and descending triangles are formed on a trending markets, symmetrical triangles may also occur during periods when no previous trend is clearly visible.

Symmetrical triangles are formed  when traders are becoming more and more indecisive and the volatility is decreasing. On the chart such a situation may be represented by an
array of local maximums, where each of them is lower than the previous one, and a set of local minimums, placed consequently on higher levels. For a symmetrical triangle to be properly formed, at least 2 local maximums and 2 local minimums are usually required - it is not uncommon to see e.g. 6 local touching points, 3 for each trendline.

How to use the symmetrical triangle to forecast a potential price movement

Sometimes, if the symmetrical triangle is properly formed, one may use the first touching point at the widest part of the triangle, and draw a straight line until it reaches the support line. This line/distance should later be applied at the breaking point of the formation. This new level (the sum of the breaking level and the length of the line) is sometimes the level a price will reach after breaking the formation.

How to use it with MetaTrader 5:

• Triangles can be plotted on a chart by combining two trendlines
• The trendlines can be plotted using a “Draw trendline” icon, or choosing the “Insert/Object” option form the menu and then “Draw trendline”.