A triangle pattern is a technical analysis tool best described as a horizontal chart pattern. Traders use it to determine market dynamics and the assets’ balance between buying and selling. Read ahead to get tips on how to use the pattern when trading on Binomo.
Types of triangle patterns
A triangle is illustrated as two trend lines that intersect at a point. The upper line is drawn using the highs, while the lower one (also called the demand line) is drawn using the lows. As the trades continue, a sideways pattern is seen: the range of trading (the difference between the buys and sells) narrows, forming two lines that intersect to form a triangle.
There are three kinds of triangle patterns seen while trading on the Binomo platform. Let’s discuss each of them in more detail.
It is a bullish pattern that usually forms in an uptrend. The lows are connected by a trendline, while the highs are attached by the resistance level which they touch.
When the pattern appears, most likely, the uptrend will continue. Therefore, the best entry point is right where the breakout from the resistance level occurs. That’s when you should open a buy position that lasts 15 minutes or more.
Unlike the previous one, this pattern forms along a downtrend. To plot it, you need to connect the highs of the prices with a trendline. The lows should be fixed with the support line.
The best trade entry point is where the price breaks the support and resumes the downtrend. That’s when you should enter a sell position for 15 minutes or more.
A symmetrical triangle is a chart pattern where the slope of the highs and the slope of the lows converge together at a point. However, unlike ascending and descending triangles, there is no clear direction the market is heading. This is because the buyers and the sellers need to push the price more to form a clear trend. It can be called a draw between the buyers and sellers.
However, when a breakout occurs, you may find that a strong trend is underway. Studies say that the breakout often occurs in the direction of the existing movement. Therefore, immediately after the breakout, you should trade in the new trend’s direction.
How to use triangle patterns?
As continuation patterns, triangles show the direction in the price is highly likely to continue. Your main objective while utilizing them is to identify the point of the breakout, as that is when the trend begins to form.
Jumping in once a trend is established gives a good chance of making a correct forecast. These trading tricks can help you get the most out of triangles on Binomo:
- Identify and analyze the slope and angle of trendlines. The angle formed by the highs and lows illustrates the difference between supply and demand.
- Failed breakouts and/or double tops before the triangle formation are great tells of this pattern.
- Use the RSI and MACD indicators to determine the momentum in triangle patterns. The MACD lines usually separate significantly once a trend starts to emerge.
Keep in mind triangles can fail every now and then. Using patterns is not an ideal strategy, and it does not eliminate the risks of losing a deposit.
Now that you know how to apply triangle patterns on the Binomo trading platform, you can open a demo account and try them out there. We do not recommend testing any trading tricks and tips on real funds without free practice.