Abstract

A triangle pattern, often mentioned in crypto trading, is a general term for stock trading, currency pairs, and crypto asset trading.

It is often used to predict market trends caused by price changes. In various price charts, the direction of movement within a narrow range between two trend lines can form an upward or downward trend. This is called a triangle pattern.

A triangle pattern can be used to predict the price movement of a currency in the market.

What’s a triangle pattern?

In the crypto space, the most intuitive difference between experts and novices is not necessarily whether they’re lucky or not but how they use different strategies, especially the use of some tools or methods to identify the timing.

The triangle pattern is a crucial judgment method for market transactions that every user will encounter. It is a way of observing the price fluctuations of certain crypto in the market, which will help users predict their subsequent performance and trend in the market. If properly used, it can endow users with the ability to make a trading plan in advance in a complicated market.

There are three main forms of triangle patterns: ascending, descending, and symmetrical triangles.

These three forms are formed by the convergence of the trend line. The convergence of the trend lines in different modes all presents a triangular shape. From an intuitive perspective, changes in the trend lines will affect the final pattern of the triangular mode.

In a symmetrical triangle pattern, one trendline moves down while the other moves up; in both the ascending and descending triangle patterns, one trendline is flat (horizontal) while the other one is rising or dropping.

Next, let’s go through the details of these three triangle patterns.

Symmetrical triangle pattern

（Source: Gate.io - BTC/USDT trading pair)

In the price formation of a symmetrical triangle pattern, the support and resistance lines slope toward each other and converge, with the resistance line descending from the top and the support line ascending from the bottom.

A symmetrical triangle pattern is a sign of price consolidation, which usually emerges within a certain price trend or trading range. When it forms, it means that the market faces the problem of balancing bulls and bears. Only by solving this problem can the future trend be driven.

This pattern usually appears before some specific trend changes, such as before the release of financial policies and other closely related events in the market. As price catalysts for certain types of cryptocurrencies, this pattern generally appears when the price trend is in a symmetrical triangle formation.

If a symmetrical triangle forms a trend within a certain period of time and breaks out in a certain direction, it is a strong sign that the price will move.

If a symmetrical triangle appears within the trading range, the price of the cryptocurrency may continue to move toward where it breaks out. Users can use the trend of the symmetrical triangle to predict the target profits they can get. This could be done by measuring the size of the triangle from the highest point to the lowest point, and making a plan in advance from the breakthrough point of the first target profit.

Ascending triangle pattern

（Source: Gate.io - ETH/USDT trading pair）

An ascending triangle pattern is a strong sign that the bullish trend will continue. A flat-topped triangle will form when the currency price rises above the resistance line. However, when the price drop represented by the rising support line occurs, a wave of panic buying will happen in the market.

An ascending triangle pattern is driven by the price momentum of cryptocurrencies. It will make breakthroughs further when buyers surpass sellers. Since this form itself is a sign of a strong bullish continuation, users can use it to predict the height of the price rebound, and then judge the target price to make an early layout and gain profits.

Descending triangle pattern

（Source: Gate.io - DOGE/USDT trading pair）

Opposite to an ascending triangle pattern, a descending triangle is a strong sign of a bearish continuation pattern. It forms in a downtrend and there is a downward resistance line at the bottom of the triangle.

Generally, a descending triangle pattern appears when the price is in a downward trend, and the support line and resistance line squeeze each other into a triangle. This triangle consists of a lower-priced support line and a downtrend resistance line. In this pattern, the price of a cryptocurrency could break in either direction; that’s to say, it could result in a bearish or bullish market.

However, in most cases, the descending triangle pattern indicates that the price of the cryptocurrency will probably break below the triangle. This means the price of the currency will decline further.

Conclusion

Lots of crypto users may need a more intuitive awareness of the triangle pattern because it could be monotonous if they only look at the price action chart. However, all users must be aware that no matter what kind of triangle pattern it is in, it reflects that the current market is undergoing fluctuations, which means that risks and opportunities coexist.

Basically, users should try not to trade within the triangle formation unless the size of the triangle pattern is large. With the closing of the triangle pattern, the price fluctuation range will become increasingly smaller, and so will the profit that the transaction can get. Besides, the expected profit from buying and selling will also gradually decrease. Therefore, when the crypto market fluctuates, you can make better judgments by observing the triangle pattern. It is also necessary to pay attention to the entry and exit timing during the process.