Bullish triangle is a continuation pattern of the bullish pattern itself. Bullish triangle also has several types. You can learn about it through the following article. But before that, also read other GIC articles such as Bullish Harami: How to Read, Characteristics, Examples, and Benefits.

What is a Bullish Triangle

Symmetrical triangle bullish is a bullish continuation chart pattern. The pattern is formed by two converging trendlines that are symmetrical in relation to the horizontal line. The first line is a bearish trendline that creates resistance, also called the "resistance line of the symmetrical triangle bullish". The second line is a bullish trendline that creates support, also called the "support line of the symmetrical triangle bullish".

For a symmetrical triangle to be called “bullish”, the movement before the triangle formation must be bullish. A bullish symmetrical triangle is confirmed/valid if it has good oscillation between the two lines. Each of these lines must be touched at least twice to validate the pattern. NB: a line is considered “valid” if the price line touches the support or resistance at least 3 times. This implies that a bullish symmetrical triangle is considered valid if the price touches the support line at least 3 times and the resistance line twice (or the support line at least twice and the resistance line 3 times).

The price target for a bullish symmetrical triangle is determined by the height of the base of the triangle plotted at the breakout point. To achieve the price target, another technique consists of drawing parallels to the support line of the bullish symmetrical triangle from the first contact with the resistance line.

How to Use Bullish Triangle


Symmetrical triangle occurs when the up and down movement of an asset's price is confined to a smaller and smaller area over time. The up move is not as high as the last up move, and the down move does not quite reach as low as the last down move. The price action creates lower swing highs and lower swing lows.

Connecting the swing highs to the trendline and the swing lows to the trendline creates a symmetrical triangle where the two trendlines move toward each other. The triangle can be drawn after the two swing highs and the two swing lows are connected with a trendline. Since price can move up and down in a triangle pattern multiple times, traders often wait for price to form three swing highs or lows before drawing the trendline. In real-world applications, most triangles can be drawn in slightly different ways.

For example, Figure 1 shows a number of ways that different traders have drawn triangle patterns on this one-minute chart. Traders and market analysts generally view symmetrical triangles as consolidation patterns that can predict the continuation of an existing trend or a trend reversal. These triangle patterns form when a rising support line and a falling resistance line meet as the security's trading range becomes narrower.

Typically, a security’s price will bounce back and forth between the two trendlines, moving toward the triangle’s apex, eventually breaking out in one direction or the other and forming a continuing trend. If the symmetrical triangle is following a bullish trend, watch closely for a breakout below the ascending support line, which would indicate a market reversal to a downtrend. Conversely, a symmetrical triangle following a continuing bearish trend should be watched for indications of an upward breakout from a bullish market reversal.

Regardless of whether the symmetrical triangle breakout is in the direction of continuing the existing trend or in the direction of a trend reversal, the momentum generated when price breaks out of the triangle is usually enough to push the market price a significant distance. Thus, a breakout from a symmetrical triangle is usually considered a strong signal of future trend direction that traders can follow with confidence.

Again, triangle formations offer easy identification of reasonable stop-loss order levels—below the triangle low when buying, or above the triangle high when selling short. Below is an example of a bullish symmetrical triangle forming on the daily chart of Narayana Hrudayalaya Ltd. We can see how it formed in an ongoing uptrend and price broke out from the upper trendline in the direction of the prior trend:

Stop Loss

Stop loss is placed just before the breakout point in the symmetrical triangle chart pattern.

Target Price

The price target is equal to the distance from the high and low of the earliest part of the pattern applied to the breakout price point. Symmetrical triangles work best with other chart pattern analysis. Traders, when using symmetrical triangles, look for high volume movements in the stock price so that the breakout is confirmed. Other indicators can also help in estimating the duration of the breakout. For example, the Relative Strength Index is used with symmetrical triangles to estimate when a stock becomes overbought after a breakout.

Characteristics of Bullish Triangle Pattern

Following are the important features and characteristics for this pattern.
  • Breakout Occurs
Technical analysts pay close attention to how long it takes for the triangle to develop to its apex. The general rule is that price should breakout - clearly break through the upper trendline - somewhere between three-quarters and two-thirds of the horizontal width of the formation. The breakout, in other words, should occur well before the pattern reaches the apex of the triangle. The closer the breakout occurs to the apex, the less reliable the formation becomes.
  • Triangle duration
triangle is a relatively short-term pattern. While long-term triangles form, the most reliable triangles take between one and three months to form.
  • Volume
Investors will see volume decrease as the pattern develops towards the top of the triangle. However, upon the breakout, there should be a marked increase in volume.

Requirements for a Bullish Triangle

When trading with the symmetrical triangle Chart Pattern, there are certain rules to keep in mind:
  • Converging trendlines must converge to create the same slope.
  • A bullish symmetrical triangle should form in an ongoing uptrend and price should breakout from the upper trendline.
  • A bearish symmetrical triangle should form in an ongoing downtrend and price should break above the lower trendline.

Bullish Triangle Types

Triangle patterns are a commonly used technical analysis tool. It is important for every trader to recognize patterns that form in the market. Patterns are essential in a trader’s quest to spot trends and predict future outcomes so they can trade more successfully and profitably. Triangle patterns are important because they help indicate whether the market is bullish or bearish.

They can also help traders spot market reversals. There are three types of triangle patterns: ascending, descending, and symmetrical. The image below illustrates all three. As you read the details for each pattern, you can use this image as a reference point, a useful visualization tool that you can use to get a mental picture of what each pattern looks like. And here is a short version of a triangle pattern:
  • Ascending triangles are bullish formations that anticipate an upside breakout.
  • Descending triangles are bearish formations that anticipate a downside breakout.
  • symmetrical triangle, where price action grows narrower, may be followed by a breakout to either side—up or down.

 

Ascending Triangle Pattern

The ascending triangle pattern is bullish, meaning it indicates that the price of the security is likely to move higher once the pattern completes itself. The pattern is created with two trendlines. The first trendline is flat along the top of the triangle and acts as a resistance point that—once price breaks above it—signals the resumption or beginning of an uptrend.

The second trendline—the bottom line of the triangle that shows price support—is an ascending line formed by a series of higher lows. It is this configuration of higher lows that forms the triangle and gives it its bullish character. The basic interpretation is that the pattern reveals that each time sellers try to push prices lower, they are less and less successful. An ascending triangle pattern forms when a security’s price bounces back and forth between the two lines.

Prices move to highs, which inevitably encounter resistance, leading to a price decline as the security is sold. Although prices may fail to overcome resistance several times, this does not lead to increased strength for sellers, as evidenced by the fact that each sell-off after meeting resistance stops at a higher level than the previous sell attempt.

Finally, price breaks through the upside resistance and continues in an uptrend. In many cases, price is already in an overall uptrend and the ascending triangle pattern is seen as a consolidation and continuation pattern. If an ascending triangle pattern forms during an overall downtrend in the market, it is usually seen as an indication of a possible upcoming market reversal to the upside.

Indications and Use of the Ascending Triangle Pattern

Since the ascending triangle is a bullish pattern, it is important to pay attention to the ascending support line as it indicates that bears are gradually exiting the market. The bulls (or buyers) are then able to push the security’s price past the resistance level indicated by the triangle’s upper flat line. As a trader, it is wise to be cautious in making trade entries before price breaks above the resistance line as the pattern may fail to fully form or be violated by a move lower. There is less risk involved in waiting for a confirmatory breakout. Buyers can then place a reasonable stop-loss order below the triangle pattern low.

Using the Descending Triangle Pattern

Based on its name, it should come as no surprise that the descending triangle pattern is the opposite of the pattern we just discussed. This triangle pattern offers traders a bearish signal, indicating that prices will continue to fall as the pattern resolves itself. Again, two trendlines form the pattern, but in this case, the lower support line is flat, while the upper resistance line slopes downward.

Just as the ascending triangle is often a continuation pattern that forms in an overall uptrend, the descending triangle is a common continuation pattern that forms in a downtrend. When it appears during a long-term uptrend, it is usually considered a signal of a possible market reversal and change in trend. This pattern develops when the price of a security falls but then bounces off a support line and rises.

However, each attempt to push the price higher was less successful than the previous one, and eventually, sellers took control of the market and pushed the price below the lower support line of the triangle. This action confirmed the descending triangle pattern's indication that the price was headed lower. Traders could have sold short on the downside breakout.

Trading Strategy with "Bullish Engulfing" Candlestick Pattern

Using the symmetrical triangle pattern

Traders and market analysts generally view symmetrical triangles as consolidation patterns that can predict the continuation of an existing trend or a trend reversal. The triangle pattern forms when a rising support line and a falling resistance line meet as the security's trading range becomes smaller. Typically, the security's price will bounce back and forth between the two trend lines, moving toward the apex of the triangle, eventually breaking out in one direction or the other and forming a continuing trend.

If the symmetrical triangle follows a bullish trend, watch closely for a breakout below the ascending support line, which would indicate a market reversal to a downtrend. Conversely, a symmetrical triangle that follows a sustained bearish trend should be watched for indications of an upside breakout from a bullish market reversal. Regardless of whether the symmetrical triangle breakout is in the direction of continuing the existing trend or in the direction of the trend reversal, the momentum generated when price breaks out of the triangle is usually enough to push the market price a significant distance.

Thus, a breakout from a symmetrical triangle is usually considered a strong signal of future trend direction that traders can confidently follow. Again, the triangle formation offers easy identification of a reasonable stop-loss order level—below the triangle low when buying, or above the triangle high when selling short.

The Benefits of Using Bullish Triangle

The definite advantage when using this pattern is that when it works correctly, you will usually see a sharp breakout… This is because the buy or sell volume has been building for some time, and the bears/bulls defending the support/resistance level will usually be taken out of their positions. A stop will usually be placed just beyond the level, and once it is taken out, it adds a higher sell or buy amount to the trade.

After learning about the bullish triangle, you can prepare to implement a strategy when trading with this bullish triangle. Next, you can register with GIC to enjoy all the excellent features of our forex trading platform!