Symmetrical Triangle

DEFINITION of 'Symmetrical Triangle'

A chart pattern used in technical analysis that is easily recognized by the distinct shape created by two converging trendlines. The pattern is identified by drawing two trendlines that connect a series of sequentially lower peaks and a series of sequentially higher troughs. Both trendlines act as barriers that prevent the price from heading higher or lower, but once the price breaches one of these levels, a sharp movement often follows.

Symmetrical Triangle

BREAKING DOWN 'Symmetrical Triangle'

A symmetrical triangle is generally regarded as a period of consolidation before the price moves beyond one of the identified trendlines. A break below the lower trendline is used by technical traders to signal a move lower, while a break above the upper trendline signals the beginning of a move upward. As you can see from the chart above, technical traders use a sharp increase in volume or any other available technical indicator to confirm a breakout beyond one of the trendlines.

The sharp price movement that often follows a breakout of this formation can be captured by traders who are able to identify the pattern early enough.

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RELATED FAQS
  1. How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Trade entries created based on the symmetrical triangle pattern are usually very effective, since a decisive breakout to ... Read Full Answer >>
  2. What are the main differences between a Symmetrical Triangle pattern and a pennant?

    While both the symmetrical triangle and the pennant are continuation patterns with a good degree of reliability, there are ... Read Full Answer >>
  3. How are Symmetrical Triangle patterns interpreted by analysts and traders?

    Analysts and traders generally interpret the symmetrical triangle pattern as a continuation signal, but it can also herald ... Read Full Answer >>
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