Written by and copyright © 2005-2013 by Thomas N. Bulkowski. All rights reserved.
For more information on this pattern, read
Encyclopedia of Chart Patterns, Second Edition,
pictured on the right, pages 748 to 764. That chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics, trading tactics, and sample trade. Below is just a sliver of the information contained in the book.
Symmetrical triangles, sometimes called coils, are a popular chart pattern because they appear often and perform
reasonably well in a bull market. This opinion is based not on the performance rank, which is mediocre, but on trading
Symmetrical Triangle Chart Pattern
Symmetrical Triangles: Important Bull Market Results
Overall performance rank for up/down breakouts (1 is best): 16 out of
23; 15 out of 21
Break even failure rate for up/down breakouts: 9%; 13%
Average rise/decline: 31%; 17%
Throwback/pullback rate: 37%; 59%
Percentage meeting price target for up/down breakouts: 66%; 48%
The above numbers are based on hundreds of perfect trades. See the glossary for definitions.
Symmetrical Triangles: Identification Guidelines
|Price trend||Can be any direction leading to the chart pattern.|
|Shape||Triangular. Prices move between two converging trendlines.|
|Trendlines||Two trendlines bound prices; the bottom trendline slopes up and the top one slopes down.|
|Crossing||Price must cross the pattern from side to side, filling the triangle with price movement, not white space.|
|Touches||Price must touch each trendline at least twice, forming distinct valleys and peaks.|
|Volume||Trends downward 86% of the time.|
|Breakout||Upward 54% of the time and 75% of the way to the triangle apex (upward breakout) and 73% of the way for downward breakouts.|
Symmetrical Triangles: Trading Tips
|Measure rule||Compute the height from the highest peak (point
A in The Measure Rule figure to the right) to the
lowest valley in the pattern (B) then multiply it by
the above “percentage meeting price target.”
Add it (upward breakouts) or subtract it (downward breakouts) from the breakout
price. The breakout price is the point at which price pierces the trendline. The
figure shows an upward breakout with target price C.|
|Breakout volume||Patterns with heavy breakout volume (above the 30-day average) do better.|
|Yearly low||Triangles with breakouts within a third of the yearly low perform best.|
|Trend start||Triangles perform best post breakout when they appear at the start of trends.|
|Throwbacks and pullbacks||Throwbacks and pullbacks
hurt post breakout performance.|
The Measure Rule
Symmetrical Triangles: Example
The figure to the right shows an example of a symmetrical triangle chart pattern.
The consolidation pattern of the symmetrical triangle forms as volume recedes. Then, price breaks out downward, but within a few days, price
reverses and shoots out the top of the symmetrical triangle, busting the pattern and leading to a strong move upward.
Busted patterns (when the breakout is in one direction only to see price reverse and breakout in the opposite direction) often
result in strong moves. However, symmetrical triangles have a tendency to double bust -- the final breakout direction is the same as the original
-- Thomas Bulkowski
Other Symmetrical Triangles Examples
Copyright © 2005-2013 by Thomas N. Bulkowski. All rights reserved. I don't suffer from insanity. I enjoy every minute of it.