Triangular Price Correction (4xfx.biz)

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• Trading books are a form of accounting ledger that contains records of all tradeable financial assets of a bank.
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Triangular Price Correction (4xfx.biz)

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Have you ever felt like the market has no idea what it wants or where it wants to go? This is often seen on the chart as a trendless sideways move with a lot of overlap and no clear direction. However, if you step back, you begin to recognize a pattern that can provide clues as to the next possible move with a favorable risk reward ratio.

Recommended Reading: Pre-Trend Chart Patterns Every Trader Should Know: Part II

What Do Triangles Mean?

Triangles are a trendless or corrective pattern that allows bulls and bears to find equilibrium after a strong trend. Triangles can happen after uptrend or downtrend and they often mean there is one more punch in the direction of the trend. Another benefit to recognizing and trading the breakout after the triangle is that triangles provide very clear profit targets.

Triangles can be easily identified by drawing trendlines off of converging highs and lows until a breakout occurs. If the trendlines are not converging, then it’s best not to trade it as a triangle. If you have trouble identifying the important highs, you can use a tool like fractals. Fractals will identify the highest high or lowest low over a 5-bar period as seen on the XAUUSD chart below. One thing to ensure is that what you label as the end of the triangle or ‘e’ wave cannot surpass beyond the ‘c’ wave extreme or something else is at play.

Triangles Are Easy to Spot, Knowing How to Trade Them Is What’s Important

Trading the Breakout after a Triangle Correction

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