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Bilateral chart patterns are triangular patterns that prices are bound within. They signal either upwards trends or downwards trends, it depends on how the price breaks the triangles.

There are three main types of bilateral chart patterns;

  • Symmetrical Triangle
  • Ascending Triangle
  • Descending Triangle

 

Lets explore them in more detail, below.

 

 

Symmetrical Triangle

 

A symmetrical triangle is a bilateral chart pattern where resistance of highs is angled downwards, and the support of lows is angled upwards. This occurs due to neither the buyers or sellers being able to take charge of the price’s movement, therefore it is considered a consolidation period. When this happens, both the support and resistance lines bound the price in a symmetrical triangle, which looks like below.

 

symmetrical triangle
As you can see, when the price goes down slightly the candles and lower highs, conversely when the price goes up slightly the candles have higher lows. As the slopes approach one another, an explosive breakout is soon to occur.

However, this type of pattern does not let us know in which direction this breakout will explode in.

Therefore, to take advantage of your knowledge that this is going to breakout, you would add in stop entry orders just above and below the two slopes respectively. 

 

breakout pattern symmetrical triangle

In this example, if we’d have placed a stop entry order just above the top slope, we would’ve taken advantage of this massive uptrend.

If you had placed another entry order below the slope of the higher lows, then you would cancel it as soon as the first order was hit.

So, whatever way the trend was to follow, you would be able to take advantage of the symmetrical triangle pattern. 

 

 

Ascending Triangle

 

A ascending triangle is a bilateral chart pattern where the resistance of highs is a straight line, and the support of lows is angled upwards.

This occurs due to buyers being able to gain some momentum, but not being able to break the strong level of resistance, as shown below.

 

In the chart above, you can see the the buyers are pushing the price, however they are failing to break a consistent level of resistance.

As the price nears the tip of the triangle, a breakout is bound to happen.

In most circumstances, this breakout will be in an upwards direction. However, this is not always the case.

Therefore, you should place stop entry orders on either side of the two lines, as you would for a symmetrical triangle pattern.

 

breakout patterns drop

In this example, the sellers managed to overcome the buyers and the price breakouts in a downtrend. ! You can see that the drop was approximately the same distance as the height of the triangle formation.

If we’d had set our short order for just below the bottom of the triangle, we could’ve caught a nice trend.

 

Note: When the price enters this downtrend (or uptrend), it tends to move the same distance as the height of the triangle.

 

 

Descending Triangle

 

A descending triangle is very similar in nature to that of an ascending triangle pattern, however, it occurs when the sellers are pushing the price. It occurs when the support of lows is a straight line, and the resistance of highs is angled downwards.

This occurs due to sellers being able to gain some momentum, but not being able to break the strong level of support, as shown below.

 

descending triangle

In the chart above, you can see the the sellers are pushing the price, however they are failing to break a consistent level of support.

As the price nears the tip of the triangle, a breakout is bound to happen.

In most circumstances, this breakout will be in an downwards direction. However, this is not always the case.

Therefore, you should place stop entry orders on either side of the two lines, as you would for a symmetrical and ascending triangle pattern.

 

breakout pattern price rise

In this example, the buyers managed to overcome the buyers and the price breakouts in an uptrend. ! You can see that the surge in price was approximately the same distance as the height of the triangle formation.

If we’d had set our long order for just above the top of the triangle, we could’ve caught a nice trend.

 

Note: When the price enters this downtrend (or uptrend), it tends to move the same distance as the height of the triangle.

LESSON SUMMARY:

– There are three main types of bilateral chart patterns;

  • Symmetrical Triangle
  • Ascending Triangle
  • Descending Triangle

– A symmetrical triangle occurs when resistance of highs is angled downwards, and the support of lows is angled upwards.

– An ascending triangle occurs when there is a consistent resistance, and the support of lows is angled upwards.

– A descending triangle occurs when there is a consistent support, and the resistance of highs is angled downwards.

Lesson tags: free forex course
Back to: Free Forex Course > Step 6 - Charting Patterns
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