TRIANGLES – These are fun to trade when you get a nice formation. They
happen less often than sideways/sloping consolidations, but when they occur
then they make for some good trading (both trading within, and after the
breakout), but they are trickier to trade because of the convergence.
I see triangles all the time, and love trading them. Ironically while writing this
eBook I couldn’t find a “textbook perfect” example as my charts can only
show me the most recent data; I don’t have historical data to pick examples
from. This is interesting for you to know because ALL the examples shown
in this eBook are pictures I took either “real time”, or of the past few
days. What this means to you is that I’m not cherry picking the best examples
over the past years of data, but showing you stuff that happens regularly –
common stuff, not exceptional examples. This just goes to prove that trading
opportunities (of various sorts) happen every day without exception.
Anyhow, I did manage to find a couple of recent examples of triangles,
though like I said they are not “textbook perfect”. Look at the examples of
triangles in “Forex Surfing” as there are a few nicer shots. But anyhow you
should be able by now to recognize a triangle on your charts when you see
one. forex sato
GBP/USD on 5 minute charts. The first triangle is a flat bottom, and the
second is a regular converging triangle. Note what happened after they broke
out.
In general, when you see a triangle begin to form you’ll see a double wave
that just gets smaller, and you’ll probably feel confused about the market
direction. Earlier in this eBook I described this situation in the section titled
“Bi-Directional In-Wave Entry”. When you see something like this then
chances are that you are witnessing the start of a consolidation or possibly
even a triangle. Once you see such a double wave then you may start trading
within the range when the market is moving inwards. If it moves most or all
of the way back to the peak/valley then you are most likely seeing a
consolidation, but if it reverses sooner (typically 79% according to Fibonacci
theory), and if it does it again in the subsequent reversal then you are most
likely seeing a triangle in formation.
The method to trade within a triangle is simply an adaptation of what you
have learned thus far from the previous discussions of trading within
sideways/sloping consolidations. As the market approaches one of the two
boundary trendlines then wait for a reversal to scalp into a trade. As it
approaches the other boundary trendline watch for a reversal to exit, and
potentially to reenter in the opposite direction. It’s as simple as that. Keep in
mind that as the triangle ages that the pip range will get progressively
tighter. Also watch for a break out of the triangle pattern to change your
approach to a “breakout” strategy of trading.
forex sato
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