A triangle forms when price coils into a progressively tighter range - higher lows meeting lower highs. It represents compressing volatility: buyers and sellers narrowing toward a decision point. The eventual breakout tends to be sharp, because the energy has been building.
The three types
An ascending triangle has a flat top (resistance) and rising lows - buyers getting more aggressive, often resolving up. A descending triangle has a flat bottom and falling highs - sellers pressing, often resolving down. A symmetrical triangle has both converging - neutral, and the break can go either way.
Why the coil matters
Tightening range means falling volatility. Volatility is mean-reverting - long compressions tend to be followed by expansions. So a triangle is really a volatility-squeeze setup: the pattern doesn't predict direction as reliably as it predicts that a bigger move is coming. The breakout, on volume, points the way.
A triangle isn't a direction bet. It's a bet that the market is about to stop being quiet.
Trading the break, not the guess
Anticipating the breakout direction inside the triangle is guessing. Waiting for a decisive break on expanding volume - ideally aligned with the broader trend and structure - is the disciplined play. False breakouts are common in symmetrical triangles especially, so confirmation beats prediction every time.
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