Three Genuine Triangle EntriesTriangles are very common and promising patterns. Normally they are considered as continuation patterns in the direction of prevailing trend. I am presenting here three useful entry techniques. None is better than the other and each one has its own strengths and weaknesses.
ANTICIPATION SETUP
As the name suggests, the trade is taken before the triangle breakout. It is in anticipation of a continuation breakout. Entry is taken at the third touch of the uptrendline.
Stoploss is fairly smaller, below previous swing low A, compared to other setups. Stop can be brought up to breakeven as soon as breakout happens.
As entry is taken before breakout, the chances of hitting the smaller stop are fairly high.
BREAKOUT SETUP
Entry is taken above the prior swing high B with stop below the recent swing low C as shown in the chart. The stoploss is relatively large but chances of hitting the stop is also relatively less.
CONFIRMATION SETUP
Many a times, after the breakout, price pulls back to the triangle for a retest. The entry is taken above the swing high E formed after the breakout as shown in the chart. Stop is kept below the recent retest swing low F or the last swing low D inside the triangle.
Stop may be large in this case but it comes with higher chances of a successful trade.
TARGETS
Target in all the three cases should be the height of the triangle, shown in the chart, as measured from the breakout point of the triangle.
PRO TIP
♦ The triangle breakout should occur within 1/3rd to 3/4th the length of the triangle (see chart). The late breakouts are not considered as valid continuations and may end up as a trading range.
♦ Ideally volume dries up as the price consolidates in a triangle. Volume starts picking up as the breakout occurs which is a good sign.
♦ Triangles setups are valid in both uptrend and downtrend.
I hope the above information would be helpful.
Thanks for reading 😉
