Highs and lows that squeeze to a point:a triangle tightens the joint.
A chart pattern formed by converging trend lines as price swings grow smaller, in ascending, descending and symmetrical forms.
Ascending and descending triangles are traditionally read as leaning upward and downward respectively, but any triangle can break either way and breakouts sometimes fail.
In plain words
A triangle forms on a chart when the swings of a price get smaller and smaller, so that a line across the highs and a line across the lows move towards each other. It shows a market in which neither buyers nor sellers are taking control, and it ends when the price leaves through one of the lines.
See it move
Line of highs and Line of lows have come together
Why it matters
Triangles come in three named forms: ascending (flat top, rising lows), descending (flat bottom, falling highs) and symmetrical (both lines sloping inward). The first two are traditionally read as leaning upward and downward respectively, but any of them can break either way, and breakouts sometimes fail.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A pair makes three highs at 1.1100 with lows between them at 1.1000, 1.1040 and 1.1070.
- 1First swing1.1100 − 1.1000 = 100 pips.
- 2Second swing1.1100 − 1.1040 = 60 pips.
- 3Third swing1.1100 − 1.1070 = 30 pips.
The swings shrink from 100 to 60 to 30 pips under a flat top at 1.1100 with rising lows, the shape called an ascending triangle.
A common mistake
The name of a triangle is not a forecast. An ascending triangle can break downward, and the pattern alone does not settle which way the price leaves.
Check yourself
Educational information, not investment advice or a recommendation to trade.