### HOW TO TRADE BEARISH SYMMETRICAL TRIANGLE CHART PATTERN

Entry: after breaking the triangle's lower border at point (5), either with an entry after the breakout, or after a possible retest of the lower border's breakout rate.

Take profit: identified by measuring the vertical distance between the first resistance (1) and the first support (2), that measurement is then applied from the breakout rate (5)

Stop loss: can either be the breakout rate (5), or the last touch to the triangle's upper border (4) before the breakout

#### BEARISH SYMMETRICAL TRIANGLE PRICE ACTION

This chart pattern starts forming with bears already in control of the exchange rate's downtrend. Then both bulls and bears try to squeeze on each other by creating higher lows and lower highs respectively, till the bears finally break the triangle's lower border created by the bulls, and the exchange rate continues its downtrend.

Let's break down the pattern formation!

In a downtrend, price action finds the first resistance (1), which will be the lowest low in the pattern.

Price action reverses direction from the first resistance (1) and goes upwards till it finds the first support (2), which will be the highest high in the pattern.

Price action reverses direction from the first support (2) and goes downwards, till it finds the second resistance (3), which must be higher than the first resistance (1)

Price action reverses direction from the second resistance (3) and goes upwards, till it finds the second support (4), which must be lower than the first support (2)

The pattern is completed when price action reverses direction from the second support (4) and goes downwards till it breaks the triangle's lower border at point (5)

#### NOTES ON BEARISH SYMMETRICAL TRIANGLE

Direction

Continuation

Type

Bearish

Occurrence

High

Common term

All

Before the breakout, 4 touches to the triangle's upper and lower borders are the minimum for a valid pattern, more touches are acceptable.

Although named symmetrical, upper and lower borders don't have to be perfectly symmetrical, as long as higher lows (1-3-…) and lower highs (2-4-…) are being formed, the pattern is considered valid.

The breakout of the pattern is expected at around (half / two thirds) the triangle formation, measured from the first resistance (1) to the intersection point of upper and lower borders.

The most common direction of the pattern is a continuation, but that doesn't rule out the existence of reversal symmetrical triangles. The target measurement in that case will be applied from the upper border's breakout rate.

Volume usually decreases as the pattern is being formed, and increases when breaking or retesting the triangle's lower border breakout rate (5)

This pattern is commonly found on all time frames.

#### BULLISH SYMMETRICAL TRIANGLE REWARD:RISK

When using the triangle's lower border breakout rate as stop loss, R:R will depend on the (breakout rate-entry rate) distance, compared to the target measurement (1-2) distance.

When using the last touch before the breakout (4) as stop loss, the pattern's R:R improves when that touch is near the end of the triangle, as well as when the upper border's down-slope is sharper.

Always remember that both stop loss levels explained above are absolute, the actual stop loss rate for your trade setup should be a bit beyond those levels to give the trade setup some room to breathe, and of course, calculations for position size and R:R should be done with respect to those rates.

### BEARISH SYMMETRICAL TRIANGLE REAL TRADE

#### PRE-BREAKOUT CALCULATIONS

Since a bearish symmetrical triangle chart pattern can be spotted after the reversal from point (4), you can save yourself precious time by doing the following set of calculations before the breakout, since they don't rely on the trade's entry rate.

However, unlike other patterns where the breakout rate is fixed, a bearish symmetrical triangle breakout rate is variable, depending on the time of the breakout. As a result, pre-breakout calculations are limited to pattern length and second stop loss.

• Pattern length (point (2) rate - point (1) rate)
• (0.63260 - 0.62652) * 10000 = 60.8 pips
• Stop loss #2 rate (point (4) rate + 10% of pattern length)
• 0.63090 + ((10 * 60.8 / 100) / 10000) = 0.63151

#### POST-BREAKOUT CALCULATIONS

The following set of calculations depends on the triangle's lower border breakout rate, which is the variable point (5). It is highly recommended to complete them as soon as a breakout occurs, so you can focus more on the calculations needed for the actual trade.

• Take profit rate (breakout rate - pattern length)
• 0.62824 - (60.8 / 10000) = 0.62216
• Stop loss #1 rate (breakout rate + 20% of pattern length)
• 0.62824 + ((20 * 60.8 / 100) / 10000) = 0.62946

Choosing when to enter the trade after the triangle's lower border breakout is always left to your best judgement. In this trade, we chose to enter the market at the closing rate of the candle that broke the triangle's lower border, which was a strong bearish candle, suggesting a real breakout for the triangle's lower border.

• At the closing rate of the candle that broke the triangle's lower border at point (5): 0.62750
• Take profit in pips (entry rate - take profit rate)
• (0.62750 - 0.62216) * 10000 = 53.4 pips
• Stop loss #1 in pips (stop loss #1 rate - entry rate)
• (0.62946 - 0.62750) * 10000 = 19.6 pips
• Stop loss #1 R:R (take profit in pips / stop loss #1 in pips)
• 53.4 / 19.6 = 2.724
• Stop loss #2 in pips (stop loss #2 rate - entry rate)
• (0.63151 - 0.62750) * 10000 = 40.1 pips
• Stop loss #2 R:R (take profit in pips / stop loss #2 in pips)
• 53.4 / 40.1 = 1.332

Currency pair

NZD/USD

Timeframe

H1

Breakout

30-Sep-2019

Platform

MT4

Broker

FXCM