Symmetrical triangle is a chart pattern in technical analysis. In symmetrical triangle variability of prices declines, which means that the lowest price from week to week gets higher and the highest one gets lower. The lines connecting all the peaks and drops create a shape of triangle.
Symmetrical triangle - interpretation
That kind of chart pattern is typical for a period of consolidation before important change. The change is difficult to predict. It can be breakout (crossing upper line) or breakdown (crossing lower line). It is difficult to interpret which way the pattern will go. It should be used with other tools of technical analysis.
If the stop loss is set, it is usually defined just below the breakout point.
- Blume, L., Easley, D., & O'hara, M. (1994). Market statistics and technical analysis: The role of volume. The Journal of Finance, 49(1), 153-181.
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