Technical Analysis: Part 5 ( Triangle Chart Pattern)

What does Triangle means?

• Triangle is a chart pattern formed by drawing trend lines along a price range that gets narrower over time because of lower tops & higher bottoms. The triangle patterns are of three types Symmetrical Triangle, Ascending Triangle, Descending Triangle.

1. Symmetrical Triangle:  The symmetrical triangle is formed when the market makes lower highs & higher lows. This pattern can act as either continuation or reversal pattern because of there shape.

2. Ascending Triangle:  The ascending triangle is formed when the market makes higher lows & the   same level highs. This pattern is normally seen in uptrend & act as continuation pattern. But when it is formed in downtrend, it can be powerful reversal signal.

 3. Descending Triangle: The descending triangle is formed when the market makes lower highs & the same level lows. This pattern is normally seen in downtrend. But when it is formed in uptrend, it can be powerful reversal signal.

What does Wedge means?

• A wedge pattern is considered to be temporary halt of primary trend. It is a type of formation in which trading activities are confined within converging straight lines which form a pattern. The boundary lines either slopes up or down, which differs from triangle.  There are two types of wedges: Rising Wedge & Falling Wedge.

Rising Wedge: When higher highs & higher lows is formed in the chart is called as rising wedge. A bearish signal, usually found in downtrend. When formed in uptrend, it can act as strong reversal signal.

Falling Wedge: When lower highs & lower lows is formed in the chart is called as falling wedge. A bullish signal, usually found in uptrend. when formed in downtrend, it can act as strong reversal signal.

 

In the next blog, we will see Flag and Cup & Handle chart pattern.