Technical Triangle Pattern: how to define it?
Category : Strategy
The financial market is cyclical; therefore, the same events are often repeated in the form of quotation movement. These patterns in our world have obtained the names “patterns”, which indicates the formation of a technical element, followed by movements in one or another direction (depending on the type of pattern). Such elements of analysis refer to the technical kind and they have dozens, or even hundreds of varieties. Such patterns are already known for more than 100 years, and each fix api trader has applied and will apply them in his trade.
As I already wrote, there are a lot of patterns that have already been confirmed by the time and the capital of exchange speculators. Today, I want to tell you about one of the most popular technical figures, namely the “triangle”.
The technical triangle pattern is a technical analysis tool that displays the movement of quotations of a financial asset in the fix apiforex market with the help of two lines stretched from consecutivedecreasing peaks and consecutivegrowing bottoms. Thus, a triangle is formed.
The operation principle of the technical pattern “triangle”
In the example above, it can be seen that the quotes of the financial asset moved in multidirectional dynamics and the upward movement was replaced by a downward trend. Thus, by setting the line on two peaks (which decrease) and setting one on the minima (which grow), we get this technical figure.
How to identify the technical “triangle” pattern
To do this, we need only 1 tool and knowledge of the principles of this element. It is not difficult to guess that this element appears when the price quotes are narrowed. Such zones are often visible. The main rule in determining this pattern is the tangency of the triangle’s boundaries 4 times: twice with decreasing peaks and twice with the growth of the bottoms. Also, a prerequisite is not the closing of quotes above the boundaries of the triangle, but within the formed pattern. It is possible to trade with such a tool only after the breakdown of one of the borders and consolidation of quotations above this level.
In order to understand in more details how to define the pattern, I propose to continue the consideration of the example.
Points 1 and 3 are descending peaks in the formed pattern, and 2 and 4 are growing minima. In this formation, it is quite easy to determine the side of breakdown. After the fourth touch, an upward wave should be expected, which for the fifth time will touch the boundary of the triangle and should be fixed above its boundary, which is clear from our example.
When I trade following this pattern, I wait for a breakdown of one of the borders (depending on the direction of the 5th point) and I expect a triple fixation above this level. If I see that the quotes have closed higher than 3 times in a row, I place a pending order at the upper boundary of the breakdown of the three candles. Thus, when the quotes are closed above my pending order, I will enter the market together with the formed trend.
The main difficulty of using this pattern in fix api trading is that the fifth point can go down sharply after touching the upper boundary and go into the sixth descending (based on our example). However, the definition of the 6th point is not a classic use of this pattern, but if you use the advice, it will guarantee you the preservation of money.
I also want to note that this pattern is perfectly combined with other technical tools and trading strategies of fix api traders. Moreover, this process can be automated and included in the settings of any trading robot, which will allow you to skip the entry points for this tool with the necessary parameters and facilitate the trader’s fate in determining this formation (http://forexzzz.com/definition-of-the-technical-triangle-pattern-and-its-automation/).