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Technical analysis in the cryptocurrency market includes a number of tools that help a trader predict the price movement of an asset. Figures and chart patterns are used by analysts to determine the appropriate trade entry point. One of the popular patterns is the triangle. We will tell you what the triangle figure means in trading, how to trade with it.
What does a triangle figure mean in trading?
The triangle pattern refers to continuation patterns, this figure indicates a high probability of the development and continuation of the trend, when its signs are already visible. The triangle is actively used in the analysis when trading Bitcoin and other popular coins. Traders who choose the top cryptocurrency for transactions use the triangle in technical analysis to determine the best time to open positions.
3 types of pattern
A triangle is two trend lines connected at one point. To understand how to trade a trader on a triangle , you need to understand the types of this chart pattern. There are three of them:
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Ascending. It shows the strengthening of the bullish trend. The upper line of the pattern indicates an upper resistance level, the lower line indicates an upward direction of the market and an increase in the support level as the trend strengthens. The price moves in a narrow range, but the bullish trend still dominates, so this pattern can be considered a fairly reliable signal to open long positions.
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descending. It shows the opposite trend of the market – “bearish”. The lower line of the triangle indicates a decrease in the resistance level as a trend forms. In this situation, the volatility of the exchange rate decreases, the stronger the trend, the lower the volatility of assets. The descending triangle can be considered a reliable signal for opening short positions.
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Symmetric. Ascending and descending triangles clearly show an uptrend or downtrend in the market, while a symmetrical triangle is a sign of uncertainty. It represents two connected trend lines with a narrow range of support and resistance, where both levels are close to each other. A symmetrical triangle signals to traders that a collapse or breakout of the rate can be expected in the near future, but a specific trend is not yet obvious . It is worth noting that a symmetrical triangle is rarely an ideal shape, although not explicitly, it already indicates a certain course movement, according to the intended market trend.
How to trade on a triangle in trading?
With the help of a triangle in the analysis, traders, as a rule, try to identify and fix a breakout – it can be seen at the end of the lines of the figure. To use the pattern, you need to add a trend line to the chart. After finding a figure on the chart, you should determine its type, ascending, descending or symmetrical. Next, you should wait for the price to break through, and after that open a deal, following the direction of the trend. This is the best way to use the pattern, especially for beginners.
Advanced players often use a pattern to predict the direction of a breakout and then open a position based on their prediction. For example, if an ascending triangle is forming that signals an impending breakout of a bullish trend, a trader can open a position near the support line. By placing an order at this level, and not waiting for a breakout, he can make good money. This is a risky strategy, it is safer to open a deal after a breakthrough, but where there are high risks, high profits.
In summary, it must be said that newcomers to trading should follow the most obvious patterns on the chart, and the triangle is one of them. To successfully use it in trading, it is important to correctly identify the lines, be able to distinguish the triangle from other similar figures and open positions following the trend.
In the Crypto Crew community and in our training course, you will learn more about what triangles are in trading, how to trade using this and other technical analysis patterns. We will teach you how to read charts correctly and use analysis effectively to increase trading profitability.
Author: admin_cryptocrew
