Ascending & Descending Triangle Triangles are very often found on the chart, but not everyone knows how to trade them.
Today we will try to learn how to trade triangles correctly.
What does it look like?
The ascending and descending triangle have two sides: one side is flat and horizontal, the second is inclined and moves towards the first.
The ascending triangle has an upper flat horizontal side, and the lower one is inclined.
When you see this figure, you have to wait for a bullish movement.
The descending triangle is a mirror image of the ascending triangle.
With a descending triangle, there is a flat lower line and an upper inclined one, which moves in the direction of a flat one.
If you see this pattern, expect a bearish breakout.
Opening a position
There are three techniques for opening a position:
1. Stop order at the level.
2. Fixing the level.
3. Retest of the triangle trend line.
Each method is good in its own way, but the logic is the same everywhere – a breakthrough of a flat line and further movement towards a breakthrough.
Therefore, if the price starts moving against the breakout, most likely the figure did not work, and in order not to lose money in such situations, set a stop loss.
Stop Loss
You need to set a stop loss in a place where it will be clear for sure that the figure did not work.
Usually this point is located behind the inclined line of the triangle.
Profit taking
There are two ways to fix profits:
1. Trailing stop.
2. Graphical projection of the price.
The trailing stop is set according to your trading strategy and there shouldn't be many questions if you have a strategy.
It is easy to calculate the fixation point from the graphical projection: it is enough to measure the width of the base of the triangle and put the resulting value below the punched flat line – this will be your goal.
Conclusion
These figures are quite common, so it is important to know how to trade them.
Do not forget that nothing works in the market 100% of the time, so set a stop loss.
Good luck!!
