the hAnDbook of teChniCAl AnAlysisfigUre 13.23 An Idealized Symmetrical Triangle Formation.
regarded as continuation patterns. A triangle formation is contained between
two trendlines. Once the two trendlines are formed, the formation is complete
or valid. No breakout is necessary for pattern completion. Volume should ide-
ally subside as the formation develops toward the apex, which represents the
point where the two trendlines converge or meet. Volume should subsequently
expand during a breakout and decline on a retest. A breakout tends to occur
when volume tests its historical low threshold levels. For all triangle forma-
tions, a breakout is usually expected around the two‐thirds to three‐quarters
point along the width of the triangle. The formation fails if no clear upside or
downside breakout occurs with price trading through the apex. The minimum
one‐to‐one price objective or target is simply the projection of the vertical
height at the base of the triangle from the breakout level. Entries may be initi-
ated at the breakout level, with stoplosses placed below the breakout trendline
or below a trough within the formation. Entries may also be initiated at the
opposite inflection point prior to a breakout with a stoploss placed just below
the opposite trendline. See Figure 13.23.
In Figure 13.24, we observe a typical symmetrical triangle formation acting
as a reversal formation and meeting its minimum one‐to‐one target price on the
weekly chart of EURUSD.
In Figure 13.25, we observe a symmetrical triangle formation acting as a
continuation formation and meeting its minimum one‐to‐one target price on the
15‐min chart of EURUSD.