A symmetrical triangle (also known as a “coil”) is a chart pattern commonly observed in technical analysis. Here are the key points:
Formation: A symmetrical triangle occurs when the price of an asset fluctuates within a narrow range, forming two converging trendlines. These trendlines connect a series of sequential peaks and troughs. The upper trendline represents resistance, while the lower trendline represents support. Shape: The trendlines in a symmetrical triangle should converge with opposite slopes, creating a narrowing pattern that resembles a triangle. Unlike other triangle patterns (such as ascending or descending triangles), where one trendline is horizontal, symmetrical triangles have both trendlines sloping toward a center point. Pause in the Prevailing Trend: Symmetrical triangles represent a pause in the prevailing trend. Bulls and bears reach an equilibrium, like two wrestlers momentarily catching their breath before the next move. Breakout Direction: Once the price breaks out decisively from the triangle, it often signals either: The start of a new trend (if it breaks above the upper trendline), or The continuation of the prior trend (if it breaks below the lower trendline). The breakout direction tells you which side—bulls or bears—has gained the upper hand. Trading Insights: Price Target: Measure the distance between the initial high and low of the earliest part of the pattern. Apply this distance to the breakout or breakdown point. Example: If the pattern starts with a low at $10 and reaches a high of $15 before narrowing, a breakout from $12 implies a target of $17 ($15 - $10 = $5, then + $12 = $17). Stop-Loss: Often placed just below the breakout point. Confirmation: Combine symmetrical triangles with other technical analysis indicators for confirmation. Remember, symmetrical triangles are like suspenseful pauses in a movie—the actors freeze, and the audience wonders, “What’s next?” So keep an eye on those converging trendlines—they’re plotting the script for the next scene! 🎬📈
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