What is a Symmetrical Triangle Pattern?
This pattern shows two converging trendlines (support levels & resistance levels) and is (1) a bearish formation that usually forms during a currency pair downtrend as a continuation pattern (downtrend will continue) or (2) a bullish formation that usually forms during a currency pair uptrend as a continuation pattern (uptrend will continue).
This pattern is confirmed when the currency pair price breaks out of the symmetrical triangle formation: (1) to the downside and closes below the lower support trendline in order to continue the downtrend or (2) to the upside and closes above the upper resistance trendline in order to continue the uptrend.
How does a Symmetrical Triangle Formation look like?
The symmetrical triangle is marked by two important trend lines. At its top, there is a line of resistance where traders are willing to sell the currency pair. This resistance line communicates the fact that bearish currency traders are over time willing to pay lower and lower prices for the currency pair indicating a possible breakout to the downside.
At the bottom, the support line communicates the fact that bullish currency traders are over time willing to pay higher and higher prices for the currency pair indicating a possible breakout to the upside.
How to trade this pattern?
For it’s the best prediction, an established trend should exist, either a strong down or a strong uptrend. Once the currency pair breaks out the symmetrical triangle, most likely, the price will continue its the previous trend.
Trade the breakout!