The convergence of the two trend lines in the opposite direction to each other creates triangular shapes. Since the fluctuation of the price is gradually decreasing, the form of a triangular shape should be carefully monitored by the short-term investor. Triangles can be found frequently in graphics. Triangles can often be found at the moment of explaining important economic data or possible information.
If a triangle is formed in a graph, the parity is getting stiff and it is getting ready to explode. The investor closely follows the triangle formed as a result of the price fluctuation. When the two trend lines intersect and come to the end of the triangle, the sudden price movement shows up and a good investment opportunity arises.
Triangles are grouped into three groups. These are descending, ascending, and symmetrical triangles. Let’s examine them in order.
The descending triangles are the regions of hypotenuse consolidation that descend from the top to the bottom. The hypotenuse has a horizontally strong trend line. The downward trend of this trend line is generally a clue to the market position of sellers; therefore it may be a good decision to move to sale. Accordingly, a descending triangle generally happens in the descending markets and indicates that the descending trend will continue. Examples of lowered triangular formations are shared below.
Rising triangles usually happen during rising trends and signify that the rising trend will continue. Over time, the rising hypotenuse has a strong horizontal trend line that investors follow as an important resistance level. The upward direction of this resistance line may be a signal that the buyers have become dominant in the market and a signal to pass to the buyer. Down below, you can find examples of rising triangular formations.
Descending and rising triangles reflect the psychology of investors in the market. In the period before the expulsion, investors are reluctant to see in which direction the prices will develop. That is why they are increasingly investing in an ever-increasing price, and it becomes apparent in the depth of the shrinking price.
When the price is determined to continue in the direction it will go, getting into the market by the investors who follow the market creates increasing prices.
The symmetrical triangles consist of two equal lines that move and join together at the same angles. Symmetrical triangles don’t give a general idea of how the pair will break. However, it is generally accepted that it will break into the trend direction. Examples of symmetrical triangular formations are shared below.