Symmetrical Triangle Complete Guide

What is Symmetrical Triangle?

The Symmetrical Triangle is a classic chart pattern characterized by two converging trendlines: a descending upper resistance line and an ascending lower support line. This formation represents a period of consolidation where the market experiences lower highs and higher lows, indicating a temporary balance between buyers and sellers. According to Thomas Bulkowski in the 'Encyclopedia of Chart Patterns,' the symmetrical triangle is technically a neutral pattern, though it acts as a continuation of the prior trend approximately 54% of the time. The pattern requires at least two touches on each trendline to be valid, though three are preferred. As the price moves toward the apex (the point where the lines meet), trading volume typically diminishes, reflecting the indecision of market participants. A decisive breakout—usually occurring between 64% and 76% of the way through the triangle's horizontal length—is required to signal the next move. Bulkowski’s research indicates that in a bull market, upward breakouts have an average rise of 31%, while downward breakouts in a bear market see an average decline of 19%. Reliability is generally high, with a failure rate of about 9% for upward breakouts in bull markets. However, traders must watch for 'fakeouts' or premature breakouts. Volume should ideally expand significantly on the day of the breakout to confirm the move. If the price reaches the apex without breaking out, the pattern often loses its predictive power and results in listless, sideways movement.

Identification Rules

1. Zwei konvergierende Trendlinien: eine fallende obere Linie und eine steigende untere Linie.
2. Mindestens vier Umkehrpunkte (zwei Hochs und zwei Tiefs) sind erforderlich, um die Trendlinien zu definieren.
3. Das Handelsvolumen tendiert typischerweise dazu, zu sinken, wenn sich der Kurs der Spitze des Dreiecks nähert.
4. The breakout should occur between 64% and 76% of the distance from the start to the apex.

References

• Thomas N. Bulkowski (2005). Encyclopedia of Chart Patterns.
• Steve Nison (2001). Japanese Candlestick Charting Techniques.

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