Symmetrical Triangle Pattern: Trading Guide

The symmetrical triangle is one of the most common chart patterns you will encounter in technical analysis. Also known as a coil pattern, it represents a period of consolidation where buyers and sellers reach a temporary equilibrium. The pattern is particularly valuable because it often leads to strong breakout moves. This guide will teach you everything about trading symmetrical triangles effectively.

What is a Symmetrical Triangle?

A symmetrical triangle forms when the price makes lower highs and higher lows, creating two converging trendlines that meet at an apex. The pattern shows that neither buyers nor sellers have control, but this indecision eventually resolves with a decisive move in one direction.

Key insight: The symmetrical triangle is considered a neutral pattern because it can break either direction. However, it often acts as a continuation pattern, breaking in the direction of the prior trend about 60-70% of the time.

Anatomy of the Symmetrical Triangle

Understanding the structure helps you identify valid patterns:

Upper Trendline (Resistance)

The descending line connecting the lower highs:

Connects at least two significant highs
Slopes downward from left to right
Price fails to exceed previous highs
Represents selling pressure capping rallies

Lower Trendline (Support)

The ascending line connecting the higher lows:

Connects at least two significant lows
Slopes upward from left to right
Price holds above previous lows
Represents buying pressure supporting declines

The Apex

The point where the trendlines would meet:

Represents the pattern completion point
Breakout should occur before reaching the apex
Typically 2/3 to 3/4 of the way to the apex

Pattern Formation Example

Stock XYZ starts at $50 after an uptrend:

Week 1: High of $52, then pulls back to $48
Week 2: Rally to $51 (lower high), pullback to $48.50 (higher low)
Week 3: Rally to $50.50, pullback to $49
Week 4: Rally to $50.20, pullback to $49.30
Week 5: Price compresses to $49.50-$49.80 range
Week 6: Breakout above upper trendline on volume

Identifying Valid Symmetrical Triangles

Ensure these criteria are met for valid patterns:

Pattern Requirements

Minimum touches: At least two touches on each trendline
Symmetry: Both trendlines should have similar angles
Volume: Should decrease as the pattern develops
Duration: Usually forms over several weeks to months
Prior trend: A trend should exist before the pattern forms

Breakout Timing

When should the breakout occur?

Ideally between 2/3 and 3/4 of the way to the apex
Earlier breakouts are often stronger
Breakouts too close to the apex are less reliable
If price reaches the apex without breaking, pattern becomes invalid

How to Trade Symmetrical Triangles

Here is a comprehensive trading approach:

Waiting for the Breakout

The safest approach is waiting for confirmation:

Draw both trendlines with at least two touches each
Wait for price to close outside one of the trendlines
Confirm with volume expansion on the breakout
Consider the prior trend direction for context

Entry Strategies

Several entry methods work with symmetrical triangles:

Breakout entry: Enter on the closing candle that breaks the trendline
Retest entry: Wait for a pullback to the broken trendline
Anticipation entry: Enter before breakout near the apex (highest risk)

Stop Loss Placement

Proper stop placement protects your capital:

For upside breakouts: Stop below the most recent swing low inside the triangle
For downside breakdowns: Stop above the most recent swing high inside the triangle
Alternative: Stop on the opposite side of the triangle

Price Target Calculation

Use the measured move method:

Measure the height of the triangle at its widest point (base)
For upside breakouts: Add this height to the breakout point
For downside breakdowns: Subtract this height from the breakdown point

Trade Setup Example

Using our XYZ example with an upside breakout:

Triangle base (at widest point): $52 - $48 = $4
Breakout point: $50.50
Price target: $50.50 + $4 = $54.50
Stop loss: $49 (below recent swing low)
Entry: $50.75 (above breakout confirmation)
Risk: $1.75 per share
Reward: $3.75 per share (2.14:1 ratio)

Volume Analysis

Volume is crucial for triangle trading:

During formation: Volume should decrease as the pattern develops
At the apex: Volume should be at its lowest
On breakout: Volume should surge significantly
Low volume breakouts often lead to false moves

Symmetrical Triangle vs Other Triangles

Understand the differences between triangle patterns:

Ascending Triangle

Flat upper trendline (resistance)
Rising lower trendline (higher lows)
Bullish bias - usually breaks upward

Descending Triangle

Falling upper trendline (lower highs)
Flat lower trendline (support)
Bearish bias - usually breaks downward