Symmetrical Triangle: Forex Chart Pattern

Formation

The Symmetric triangle is characterized by a narrowing price range between high and low prices, visually forming a triangle. The main distinctive feature of this type of triangles is that it has a descending trendline ( resistance) connecting lower and lower highs and an ascending trendline (support) connecting higher and higher lows. The trendlines’ angles are roughly the same.

Interpretation of Symmetric Triangle

This pattern confirms the trend movement direction in case of breaking through:

• when the triangle is formed in a downtrend and the price breaks below the support line (plus certain deviation is possible), a sell signal is received;
• alternatively if the triangle is formed in an uptrend and the price breaks above the resistance line (plus certain deviation is possible), a buy signal is received.

Target price

Following a symmetric triangle pattern formation the price is generally believed to fall or rise at least to its target level, calculated as follows:

		In case of an uptrend:
		T = BL + H
		In case of a downtrend:
		T = BL – H
		Where:
		
T – target price;
BL – breakthrough level (point where the price leaves the triangle);
H – pattern’s height (distance between support and resistance lines at pattern’s origin).