Indicators in Trading – Triangle Pattern

In the last weeks there has been a lot of talk about triangle patterns in BTC and ETC price analyses. What is that? This article is intended to shed some light on the indicator.

Two weeks ago, I presented an as-is analysis of the BTC course as a textbook-like chart; this is shown here for those who have not read the article (and are now reading lazy):

We can see here that the volatility of the Bitcoin secret is decreasing more and more: The resistance decreases and the support increases

Such patterns in the chart – called triangle patterns – are a sign that something interesting is about to happen: Either the Bitcoin secret price drops rapidly – or it increases rapidly. We could see this two weeks ago at Ethereum: ETH_Triangle. You can see here that at the end of the triangle pattern there was a rapid trend reversal – in this case downwards. The deepest support on 18.3. is now a resistance.

Different types of Cryptosoft Triangle Pattern

In order to clarify to what extent one can expect a cryptosoft trend reversal upwards or downwards, one must first explain that there are different types of triangle patterns. With Ascending Triangle Pattern the resistance line is flat and the support line has a larger slope. An example could be seen at cryptosoft last week:

We see that the resistance line is almost straight, but the support line rises much more. So the support rises while the resistance falls much weaker. What does that mean? That the bulls seem to win the battle against the bears – and as you saw on April 12th they finally won the war – the price rose significantly.

A second possibility is the Descending Triangle Pattern: a (not quite as good) example of this is the Ethereum price shown above: Here the support did not increase as much as the Resistance decreased. This meant that the bears were stronger than the bulls, which finally led to the price fall on 4 April.

Finally, there is a pattern where the price development is more difficult to predict: the Symmetric Triangle Pattern. A prime example is the first picture shown here: The ascent of the support is almost as strong as the descent of the resistance. So bulls and bears fight for the upper hand – so far not with an ambiguous result

The big question here, of course, is what you can do, so you should pay attention to how a price behaves after a slight breakout: is it near the trend line (like the BTC price between April 8 and April 12) or can you observe a real movement away from the trend lines?

In this respect, ascending and descenting triangle patterns are much better to assess. If one sees such a pattern, one should consider drawing the consequences: Buy if we have an ascending triangle pattern, sell if we have a descending triangle pattern.

When does the breakout come?
It’s not like every triangle pattern will run to the bitter end, a triangle pattern can be left before that – so we’ll wait every day to see what happens at the BTC rate. An indication of a breakout can be an increase in volume, so you should look at the corresponding indicators.

Of course, as always in trading, caution is the mother of the porcelain box and not a completely empty wallet: You should always put so much money into a trade that in case of doubt you have not lost too much and can cope with the loss.