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)
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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
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)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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