The Symmetrical Triangle is usually a continuation pattern. It represents a pause in the existing uptrend after which the original uptrend gets resumes. A breakout from the upper trend line marks the continuation of an uptrend while a breakdown from the lower trend line marks the start of a new bearish trend . This pattern is also known as a wedge chart pattern.
How does Symmetrical Triangle Pattern Work? Phase 1: Existing Uptrend When there is an extreme demand in prices there is an uptrend. It continued as the demand increases.
Phase 2: Pause When demand is equal to supply the there is a pause in an uptrend and investors start to book profits here. As prices consolidate it forms converging trend lines . As there is equal demand and supply investors buy on the lower trend line and sell on the upper trend line . Which results in forming a Symmetrical Triangle Pattern . Phase 3: Uptrend Continuation After demand matching the supplies when there is when buyers are again interested to buy demand increases. Which results in breakout! And the continuation of the uptrend.
Role of Volume: Volume plays a major role in a symmetrical triangle pattern . When in an uptrend the volume is quite higher. In the second phase, the volume starts to diminish due to equal demand and supply. And again on the breakout, the volume surges. Volume with Breakout gives a good indication of a successful uptrend.
Above Chart Explanation: This is a 4H chart of AXSUSDT we can see it's in an uptrend previously with good volumes. Now after successful uptrend prices consolidate with diminishing volumes. And after it, there is a breakout with above-average volumes. And then the uptrend continues.
Conclusion: Symmetrical Triangle Pattern is a continuation pattern. Which on upper trend line breakout can give a potential bull move and when on lower trend line breakout gives a possible bear move.
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Disclaimer: This is just an educational post never trade just any pattern. And please do your research before making any trades.
PS: We are again publishing this for our Indian audience. Happy Trading!