Ascending and descending triangles in trading
They are characterised by a horizontal upper triangle line and a rising lower line. The probability of an upward breakout is particularly high in ascending triangles, since the forces of the buyers also outweigh those of the sellers within the formation. Ascending triangles occur in uptrends. Descending triangles are the analogue of ascending triangles and occur in downward market movements.
Special case inverted triangle
A special variant of the triangle is the so-called megaphone top. It is also called a broadening top or an inverted triangle. Unlike all other triangle types, the two triangle lines diverge, i.e. run further and further apart.
In a textbook course, the widening of the price swings is accompanied by rising volume. Inverted triangles often occur in market situations dominated by psychological aspects. Very often they mark the end of a bull market or even a speculative bubble.
Flags and pennants
While triangles represent relatively pronounced consolidation phases, flags and pennants mark a very short-term interruption of the prevailing trend. Flags and pennants usually occur in very strong trends. Both continuation formations are very similar and are considered very reliable.
A bullish flag resembles a rectangle with two parallel straight lines that are directed against the prevailing trend direction. Accordingly, at least two highs and lows are required within each of the parallel lines.
The breakout occurs by breaking the upper trend line. Turnover should fall sharply from a very high level within the formation and rise sharply again on a breakout in the trend direction.
Bulish pennant definition by thai traders: ยั่วยวนวัวสับสนได้ง่ายกับสามเหลี่ยมขนาดเล็ก (สมมาตร). ประกอบด้วยสองบรรทัดที่บรรจบกัน. การรวมจึงเกิดขึ้นใน ประเภทบัญชี exness ด้วยระยะเวลาที่เพิ่มขึ้นของการก่อตัวด้วยความผันผวนลดลงอย่างต่อเนื่อง.
A bullish pennant is easily confused with a small (symmetrical) triangle. It consists of two converging lines. The consolidation thus takes place with increasing duration of the formation with successively decreasing volatility.
Unlike triangles, however, the vertical of the formation is not important for chart price target determination: both flags and pennants tend to occur about halfway through the entire trend movement. The mnemonic for this is: "Flags and pennants fly at half mast".
Wedges and rectangles
Wedge formations occur in uptrends and downtrends and at first glance resemble triangles because they are constructed by two converging lines and the breakout is in the direction of the trend. In wedge formations, however, the consolidation is directed more strongly against the prevailing trend than in triangle formations. Therefore, the breakout from a falling wedge occurs upwards and the breakout from a rising wedge occurs downwards.
Rectangle formations are also called trading ranges. The consolidation phase takes place within two parallel lines.
Rectangles are broken up in the direction of the trend when the breakout occurs in that direction. However, the formation can also represent an upper turning point and herald a trend change in the event of a breakout against the previous trend direction. Therefore, the trading volumes in the underlying are of particular importance when analysing the formation.