What is the Triangle Formation?

The triangle formation is one of the basic formations that are used in technical analysis.Often a particular triangle signifies the continuation of a trend, but there are also neutral triangles, as well as very rare triangle formations that announce a trend reversal. This is not the most difficult formation to spot, and the beginning trader should be able to cope efficiently with learning how to spot this formation.

What triangles are found in technical analysis?

Among triangle formations, there are as many as four types of them, of which two are quite significant, one of them is usually ignored, and one occurs quite rarely. And so, in this order, we can mention the upward triangle, which, of course, means the continuation of the upward trend, the downward triangle, which usually means the continuation of the downward trend, the symmetrical triangle, which occurs in a downtrend and an uptrend and means continuation of the trend, but there are quite a few false breakouts in it, making it unreliable, and the last triangle formation, is the inverted triangle, which is quite rare and announces the reversal of the uptrend.

How to find triangle formations?

The formation of this formation occurs when the market establishes a new maximum or minimum, and then the price correspondingly higher or lower not is accepted by the market and this leads to a bounce of the price at the line maximum, or minimum. At the same time, the supply or demand is so weak that new lows or highs are also not established, and then a geometric triangle is formed. At some point, however, the maximum or minimum is pierced and we can talk about the continuation of the trend.

How to use the triangle formation

The triangle formation is one of the most well-known formations in technical analysis. It is used both by individual investors and by trading programs to predict future price movements.