We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • (#ASEAN #TechnicalAnalysis) US Dollar Tries Recovery Vs Philippine Peso, Malaysian Ringgit $USDPHP $USDMYR #USD - https://www.dailyfx.com/forex/technical/article/special_report/2019/11/13/US-Dollar-Tries-Recovery-Vs-Philippine-Peso-Malaysian-Ringgit.html?CHID=9&QPID=917702 https://t.co/tYPUvaM9R1
  • Following today's unexpected #RBNZ rate hold, overnight index swaps are now pricing in a 27.8% chance of a 25bp reduction from the central bank at the February 2020 meeting with odds hovering at 53.3% for a September delivery instead -BBG $NZDUSD
  • This piece will analyze key technical developments in $EURNOK, GBP/SEK, GBP/NOK and $USDSEK as each pair approaches key technical levels.Get your market update from @ZabelinDimitri here:https://t.co/IQ75REEYZg https://t.co/lDcRCsGXgW
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Silver: 0.51% Gold: 0.11% Oil - US Crude: -0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/82pvWIi4ES
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 1.15% 🇨🇭CHF: 0.11% 🇪🇺EUR: 0.05% 🇬🇧GBP: 0.02% 🇯🇵JPY: -0.05% 🇨🇦CAD: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/P5yzmdZkAg
  • ANZ Bank sees #RBNZ cutting rates in May and August 2020 -BBG $NZDUSD
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.57%, while traders in France 40 are at opposite extremes with 86.45%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/DXkv6HANqX
  • RT @YuanTalks: #PBOC cut yuan's fixing by 38 pips to 7.0026 per USD, vs 6.9988 one day earlier.
  • RT @Birdyword: Hong Kong stocks off again this morning - property companies now down 7.5% for the week so far. https://t.co/RcxMVemuCZ
  • RBNZ's Orr: Plans to update on framework for unconventional tools, no urgency to use unconventional tools -BBG $NZDUSD #RBNZ
Trading Price Action - Triangles

Trading Price Action - Triangles

2012-04-26 22:24:00
James Stanley, Currency Strategist
Share:

Trading in ranging or congested periods in the market can prove challenging for a number of reasons; and because of this many traders choose to wait for prices to breakout before looking to initiate a position.

This article will walk through one of the more common congestion patterns in use by price action traders: The Triangle; as well as possible ways that traders can look to play this pattern.

What is a triangle?

A triangle is a period of activity in which prices form what literally appears to be a triangle, or wedge on the chart. The below picture will illustrate a ‘descending triangle:’

Trading Price Action - Triangles

Created with Marketscope/Trading Station

As you can see, the currency pair is in the process of making lower highs and lower lows; but it has not yet been able to decisively break through previously established support.

This tightening range of prices can offer a potential setup to the price action trader. Before we get into how to plot trades on triangles, let’s take a look at another flavor of the triangle formation.

Trading Price Action - Triangles

Created with Marketscope/Trading Station

How to trade Ascending/Descending triangles

The most common way of playing triangles is to look for breakouts as either support or resistance is being broken. With the Ascending or Descending Triangle the trader has luxury of a strong element of support and/or resistance to utilize. Let’s take a look at the same descending triangle we looked at a moment ago:

Trading Price Action - Triangles

Created with Marketscope/Trading Station

As the currency pair is making lower highs while buckling up to a strong support line, traders can get the idea that the weakness in the pair isn’t quite great enough to break through, but at some point, may be able to. And if price momentum is strong enough to break through support, price may be able to continue to run.

So many traders will go into a Descending triangle as we see above with a bearish stance, looking to enter the trade once support can become broken. This can be done by placing an entry order to go short below support.

For Ascending Triangles, the trader can look to a bullish bias as higher lows have been unable to break through resistance. The trader can look to enter by placing an entry order to go long above resistance.

Symmetrical Triangles are a little different as a strong element of static support and/or resistance isn’t available in the same way as it might be with an ascending or descending triangle.

With a symettrical triangle, because price action is narrowing by making both higher lows and lower highs, traders might be unsure of which direction a possible breakout may occur.

As such, it may be more prudent to wait until the break of support or resistance takes place; and then looking to trade the pair in that direction.

Trading Price Action - Triangles

Created with Marketscope/Trading Station

Next: Mastering Triangle Patterns (21 of 47)

Previous: Triangle of Trade

--- Written by James B. Stanley

You can follow James on Twitter @JStanleyFX.

To join James Stanley’s distribution list, please click here.

Trading Price Action - Triangles

How to Analyze and Trade Ranges with Price Action

How to Identify Positive Risk-Reward Ratios with Price Action

Trading Trends by Trailing Stops with Price Swings

How to Trade the Parity Channel with USDCAD

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.