“Symmetric Triangles” form when the markets are in indecision mode. The “Symmetric triangles” can be easily detected when prices make alternate “lower highs” and “higher lows” in upside and downside slopes defining a symmetry. “Symmetric” triangles form when supply and demand are near equal resulting in market indecision. Most triangles result in a clear breakout and breakdown in the direction of the prior trend.
Trade:
Trades are only initiated at the trend line breakouts of the “Triangle.” Enter trades only when “Symmetric triangle” breakoutsibreakdowns are confirmed by price trading one or two ticks aboveibelow the breakout/breakdown bar’s highllow.
Target:
Most “Symmetric triangles” result in 100% of the depth riselfall of the entire triangle range in the direction of the breakout. Partial trade exit targets are set at 50% of the depth from the trade entry. Protect targets by using trail stops.
Stop:
“Symmetric triangle” failures occur when price results in false breakouts. Stop below the first major “swing low” below the trend line for a long setup. Place a “stop” order above the first major swing high from the trend line for a short-setup.
Trading Symmetric Triangle
Trading Symmetric Triangle
The example above shows a “Symmetric triangle” formation from the Russell Emini (ER2) 6 10 tick chart. On May 3 1,2007, ER2 made lower highs and higher lows to form a “Symmetric triangle.” Late afternoon, ER2 prices rallied and closed above the top trendline to confirm a “Symmetric triangle”. On the following day, ER2 traded higher from the breakout to reach the target levels.
- Enter a “long” trade above the high of the breakout bar at 848.5
- Place a “stop” order below the low of the previous swing low at 845.
- Target the depth of the triangle from the breakout level to 853.
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