This method with variables is discussed in detail in the Wolfe Waves article (variables PreCount and CurCount). In this article, it was used when creating the iHorizontalFormation indicator (variables with Cur and Pre prefixes). The ready-to-use indicator is available in the below attachment, the file name is iHorizontalFormation. Past performance of a security or strategy does not guarantee future results or success.

In the real world, once you have more than two points to connect, the trendline may not perfectly connect the highs and lows. The example below shows price creating the pole with the fast rise higher, followed by the bullish flag that is created with price consolidating. Whilst the sideways consolidation and formation of the flag will often be angled lower for triangle flag pattern a bullish flag, it can also be directly sideways in a horizontal shape. If you are an aggressive trader you can take an entry when price breaks either the high or low of the pennant and look for price to continue. With these candlestick patterns price will move higher or lower before forming the reversal candlestick and moving back in the opposite direction.

In the Wolfe Waves article, the author created a simple Expert Advisor. We can slightly change the EA and use it to test indicators created in this article. Indexing of buffers of the iHorizontalFormation and iFlag indicators corresponds to indexing of iWolfeWaves buffers. So we only need to change external parameters of the Expert Advisor and the iCustom() call. The main indication of further checks is the overlap of bars (Fig. 16).

Do your research before investing your funds in any financial asset or presented product or event. Not only will this help you find and manage trades, but also analyze what the market is looking to potentially do next. Data of buffers with arrows are copied to the ‘buy’ and ‘sell’ arrays.

Descending Triangle With Moving Averages

A breakdown is a downward move in a security’s price, usually, through an identified level of support, that predicts further declines. Descending triangles are a bearish pattern that anticipates a downward trend breakout. A breakout occurs when the price of an asset moves above a resistance area, or below a support area. Technical traders have the opportunity to make substantial profits over a brief period. They often watch for a move below the lower support trend line, suggesting that downward momentum is building and a breakdown is imminent.

• In the chart above, you can see that the price is gradually making lower highs which tells us that the sellers are starting to gain some ground against the buyers.
• It’s your time to flaunt your profitable trades on Twitter using hashtags.
• Lita Epstein, who earned her MBA from Emory University’s Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills.
• The lower trendline should be horizontal, connecting near identical lows.
• For example, one trader witnessing a triple bottom reversal pattern might see things differently than another trader noticing a continuation pattern.

Bulls (or buyers) are then capable of pushing security prices past the resistance level indicated by the flat top line of the triangle. Ascending triangles tend to be bullish as they indicate the continuation of an upward trend. In some cases, they may also point to the reversal of a downtrend. That’s because they point to the continuation of a downtrend or the reversal of an uptrend. Breakout refers to a market situation where prices move above resistance levels or below support levels. These breakouts are used as indicators of opportunities for traders.

📍Bear Flag
🔸 A small rectangular pattern that slopes against the preceding trend
🔸 Forms after a rapid price decline… Both the symmetrical triangle and the pennant have conical bodies formed during a period of consolidation. Price consistently reaches higher lows and lower highs, creating two converging trendlines that form this conical shape.

Difference 1: The Flagpole

In today’s lesson we discuss the pennant, triangle, wedge, and flag chart patterns, but there are many others you can also use and you will find lessons for on this site. These include market reversals, 123 pattern, double tops and double bottoms and swing highs and lows to find high probability trades. An aggressive uptrend is followed by a slow consolidation lower in a bullish flag pattern when prices are moving upward.

To get a sense of what will happen after a triangle pattern breaks, it can help to take a look at what happened before the triangle pattern started forming. If the price is in an overall uptrend, you might expect the price to move higher eventually, even if it initially breaks out below the triangle. You can also use momentum indicators, volume, and other market data to get a sense of likely scenarios. False breakouts are the main problem traders face when trading triangles, or any other chart pattern. A false breakout is when the price moves out of the triangle, signaling a breakout, but then reverses course and may even break out the other side of the triangle.

Channel Patterns

Ascending triangles can also form at the reversal of a downtrend but are more commonly viewed as a bullish continuation pattern. Traders often initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern. The formation of any triangle is a direction indication relevant to where you find it as some can be a warning if reversal. It always moves in wave 🌊 and in those waves we have patterns like ABCD resumption. Technical analysis is a type of trading strategy where traders analyze markets and make predictions about future market movements based on past performance. This trading strategy uses tools and techniques to evaluate historical data, including asset prices and trading volumes, rather than business results.

The price is still being confined to a smaller and smaller area over time, but it is reaching a similar high point each time the low moves up. An ascending triangle can be drawn once two swing highs and two swing lows can be connected with a trendline. When a price that has been rapidly trending suddenly stops and slightly retraces in a rectangular range, the Flag pattern is formed.

How to trade the Flag pattern (Long)

We will only enter into a trade if the price breaks the trend line of the triangle. Technical tools are meant to help make predictions about future trends based on past performance. But remember that the market can be very unpredictable and can swing in any direction at any time. To calculate the ideal position size, determine how much you are willing to risk on one trade. Professional traders typically risk 1% (or less) of their account balance on any one trade.

The take profit level is set using the vertical distance measured at the beginning of the descending triangle formation. The vertical distance between the upper and lower trendline can be measured and used to forecast the appropriate target once price has broken out of the symmetrical triangle. A triangle pattern is generally considered to be forming when it includes at least five touches of support and resistance. A triangle chart pattern involves price moving into a tighter and tighter range as time goes by and provides a visual display of a battle between bulls and bears. A possible sell signal occurs when the support line is penetrated to the downside. Usually the sell signal is considered stronger if prices have been in a downtrend prior to the downside breakout.

Final Word on Day Trading Triangle Patterns

When trading, the same approach can be applied to both the Bullish and Bearish Pennant patterns however, the Bullish Pennant will have a long bias and the Bearish Pennant, a short bias. The example below demonstrates how to trade a Bullish Pennant appearing in GBP/NZD. Hello All,

I have made this video which covers briefly on following points for Auto-Chart-Patterns-Ultimate-Trendoscope

1. Info about trading different patterns included

I could not cover alerts in the video due to time constraints. The volume within the patterns is increasing during the breakout.

Triangle Breakout Potential Sell Signal

It is depicted by drawing trendlines along a converging price range, that connotes a pause in the prevailing trend. Technical analysts categorize triangles as continuation patterns of an existing trend or reversal. Despite being a continuation, traders should look for breakouts before they make a move to enter or exit a position.