Ascending triangles form when there is a resistance level and the market price continues to make higher lows. The story behind an ascending triangle is that each time the price reaches a certain high, there are several traders who are convinced about selling at that level, resulting in the price dropping back down. On the other side, there are several traders who believe the price should be higher, and as the price begins to drop, buy higher than its previous low.
The result is a struggle between the bulls and bears which ultimately converges into an ultimate showdown…. What we are looking for is a breakout to the upside since ascending triangles are generally bullish signals.
How to Draw Trend Lines Perfectly Every Time [2021 Update]
When we see a breach of the resistance level the proper decision would be to go long. Sellers are continuing to put pressure on the buyers, and as a result, we start to see lower highs met by a strong support level. Descending triangles are generally bearish signals. To take advantage of this, our goal is to position ourselves to go short if the price should breakout below the support level.
Rather than having a horizontal support or resistance level, both the bulls and the bears create higher lows and lower highs and form an apex somewhere in the middle. Unlike the ascending and descending triangles which are generally bullish and bearish signals, symmetrical triangles have NO directional bias. In the case of the symmetrical triangle, you want to position yourself to be ready for both an upside or downside breakout. A perfect time to use the one-cancels-the-other OCO order! Go review your types of orders! Ascending triangles usually breakout to the upside.
So when you think of ascending triangles, think of breaking out on your forehead.
Common trendline and channel rules
Descending triangles usually breakout to the downside. So when you think of descending triangles, think of breaking out on your chin. Symmetrical triangles can break either to the upside or the downside. So when you think of symmetrical triangles, think of breaking out on both your chin and forehead.
A lot of people get so enmeshed in the markets that they lose their perspective. Well, when you see price heading up to a falling downward trendline, look for bearish reversal candlesticks like these as price touches the trendlines to sell:. If price falls down and touches an upward trendline, look for bullish reversal candlesticks for buy entry confirmation:. The use of reversal candlesticks like above really enhances your trade entry and makes sure you are on the right side of the market when making a trade because of the price action signals given by the reversal candlesticks.
Any one of those 2 lines is a valid trendline. If price breaks them, consider it as trend change and use trendline breakout strategy to sell.
How to Trade Forex Breakouts Using Trend Lines, Channels and Triangles -
If one breaks, next thing the price has to content with is the second trendline. Based on just price action technical analysis, here are 3 possible situations that can happen. See chart below. Watch out for possible bull trap if price breaks the major resistance level and goes up…It may be a trick. The reason I say this is because if you look at the chart closely, the UP move is pretty much extended already and with the major resistance coming into play, I would not be thinking of buying.
Also watch for bearish reversal candlestick forming on the resistance zone etc to go short.
- Trend lines?
- jse trading system.
- The Trend is Your Friend: Forex Trendlines.
- 143. Trading Breakouts Using Trend lines.
Risk reward for such setups are really excellent if trade works out as anticipated and stop loss should be pretty tight. Thanks Rkae y How vividly you settle down all this. Now the art is to identify where we are treading among st these 3 scenarios you carved out. Rkay can I consult you on my market. If yes where I should I wrtie to you on this public network or you can give me some other contact.
Learn Forex: Draw Unbroken Trendlines
What I like is your minimalist approach devoid of many indicators. When things get simple I think we are moving in right direction because we often wisdom is lost in noises and solutions are always simple. Ask your questions or attach charts here so that everyone that reads can benefit. That would be a good thing I believe.
I have attached a chart of nifty Here the trend which was started from feb lows is only confirmed as late as last week when three points fall on the same line. So how to trade from Feb To september. I have drawn a trend 1 which the chart is respecting for a long time and then suddenly it goes away from it. So how to identify which trend to follow. In hindsight it is visible but in real time it is perplexing.
Hi RKay Many a times a trend line is broken and then it goes into consolidation phase. And then again resumes its previous path but due to time decay trend line goes very far from the real picture. So in consolidation does this becomes redundant and how to identify the consolidation from a break. Hello Vijay, whatever the market does to trendlines is out of our control.
You just trade the trendline bounce or the trenline break. Yes you will see consolidation after trendline breaks and the way i trade them is to make sure consolidation happens in a level of importance ,like a broken trendline retest and then confirm with reversal candlesticks to buy or sell. So nice of you to reply.