The symmetrical triangle is a versatile chart pattern that signals a period of consolidation before a significant breakout. Unlike ascending or descending triangles, the symmetrical triangle does not have a directional bias, making the breakout direction crucial for trade decisions. When properly identified, this pattern offers excellent trading opportunities with defined risk.
What is a Symmetrical Triangle?
A symmetrical triangle forms when price consolidates between a downward-sloping resistance line and an upward-sloping support line. Both buyers and sellers are becoming less aggressive, creating a coiling effect. The pattern narrows to an apex, and price typically breaks out before reaching it.
Pattern Characteristics
- Declining Resistance: Lower highs forming a downward-sloping trendline.
- Rising Support: Higher lows forming an upward-sloping trendline.
- Converging Lines: Both trendlines angle toward each other at roughly equal slopes.
- Decreasing Volume: Volume typically contracts as the pattern develops.
- No Directional Bias: Can break either way, depending on the prior trend and market conditions.
Key Insight: The symmetrical triangle is often called a coil pattern because it stores energy that is released upon breakout. The longer the consolidation, the more powerful the eventual move.
Identifying the Pattern
Proper identification requires attention to multiple factors.
Validation Requirements
- At Least Two Lower Highs: The resistance line needs at least two touches.
- At Least Two Higher Lows: The support line needs at least two touches.
- Symmetry: The trendlines should converge at roughly equal angles.
- Duration: Pattern typically forms over 3 weeks to 3 months on daily charts.
- Volume Contraction: Volume should decrease throughout the pattern.
Symmetrical Triangle Example
GOOGL rallies to $150, pulls back to $140, rallies to $148, pulls back to $142, rallies to $146, and pulls back to $143. The converging trendlines form a symmetrical triangle. Volume decreases 40% during formation. GOOGL then breaks above $147 on 2x average volume.
Predicting Breakout Direction
Since symmetrical triangles can break either way, traders use additional factors to anticipate direction.
Prior Trend
Symmetrical triangles most often break in the direction of the prior trend. If the pattern forms during an uptrend, expect an upward breakout. If it forms during a downtrend, expect a downward breakout.
Volume Clues
- Higher Volume on Up Days: Suggests accumulation and potential upward breakout.
- Higher Volume on Down Days: Suggests distribution and potential downward breakout.
Position Within Pattern
If price spends more time near the resistance line, buyers may be stronger. If price spends more time near support, sellers may be stronger.
Trading the Symmetrical Triangle
The key is waiting for confirmation rather than guessing direction.
Entry Strategies
- Breakout Entry: Enter when price closes outside the triangle with strong volume. Most reliable approach.
- Pullback Entry: Wait for the breakout, then enter on a pullback to the broken trendline.
- Pre-Breakout Entry: Enter before breakout based on directional clues. Higher risk but better reward.
Volume Requirements
Volume confirmation is essential for symmetrical triangle breakouts.
- During Pattern: Volume should decrease steadily, showing consolidation.
- On Breakout: Volume should spike significantly, at least 50% above average.
- After Breakout: Sustained volume confirms the move is genuine.
Critical Rule: Low-volume breakouts frequently fail and reverse. Patience for proper volume confirmation prevents many losing trades.
Price Target Calculation
The measured move target is based on the height of the triangle at its widest point.
Target Calculation
- First high in pattern: $150
- First low in pattern: $140
- Pattern height: $150 - $140 = $10
- Breakout point: $147
- Upside target: $147 + $10 = $157
- Downside target: $143 - $10 = $133
Stop Loss Placement
- For Upward Breakout: Place stop below the most recent higher low or below the support line.
- For Downward Breakout: Place stop above the most recent lower high or above the resistance line.
- Tight Stop: Place stop just inside the opposite trendline for tighter risk management.
Optimal Breakout Timing
When the breakout occurs within the pattern matters significantly.
Best Breakout Zone
The most reliable breakouts occur between the halfway point and two-thirds of the way to the apex. Breakouts too early may lack momentum, while breakouts near the apex often fail.
The Apex Problem
Breakouts very close to the apex are less reliable because the pattern has lost its coiling energy. If price has not broken out by the time it reaches 75% of the way to the apex, consider the pattern less reliable.
Common Mistakes
Avoid these errors when trading symmetrical triangles.
- Guessing Direction: Wait for the breakout rather than predicting which way it will go.
- Ignoring Volume: Breakouts without volume expansion frequently reverse.
- Trading Near the Apex: Late breakouts have lower success rates and smaller targets.
- Forcing Symmetry: Not every consolidation is a symmetrical triangle. Both trendlines must be valid.
- Ignoring Context: Consider the overall market trend and sector performance.
False Breakouts
Symmetrical triangles are prone to false breakouts. Here is how to handle them.
Identifying False Breakouts
- Low Volume: Breakouts on below-average volume are suspect.
- Quick Reversal: Price breaks out but quickly returns inside the pattern.
- Lack of Follow-Through: No continuation after the initial breakout day.
Managing False Breakouts
- Use Stops: Always have a stop loss to limit damage from false breakouts.
- Wait for Confirmation: Some traders wait for a close outside the pattern on two consecutive days.
- Trade the Reversal: If the initial breakout fails, the move in the opposite direction can be powerful.
Timeframe Considerations
Symmetrical triangles form on all timeframes with varying reliability.
- Weekly Charts: Most significant patterns, large targets, but require patience.
- Daily Charts: Standard timeframe for swing traders. Good balance of reliability and opportunity.
- Hourly Charts: Useful for day traders, but more false signals.
- Lower Timeframes: Noisier and less reliable. Use with caution and additional filters.
Combining with Indicators
Enhance your symmetrical triangle trading with technical indicators.
Helpful Tools
- RSI: RSI near 50 confirms the neutral consolidation. Direction of RSI breakout can signal price breakout direction.
- Moving Averages: If the 50-day MA is rising, upside breakouts are more likely.
- MACD: MACD crossing in one direction can precede the price breakout.
- Bollinger Bands: Narrowing bands during the pattern confirm low volatility before the breakout.
Track Your Breakout Trades
Pro Trader Dashboard helps you analyze which patterns and setups produce your best results. Track your symmetrical triangle trades and optimize your strategy.
Summary
The symmetrical triangle is a powerful consolidation pattern that precedes significant moves. Focus on finding patterns with clear converging trendlines, contracting volume, and breakouts in the optimal timing zone. Wait for volume confirmation before entering, and always use stop losses to protect against false breakouts. While the pattern does not predict direction, trading the confirmed breakout with proper risk management can be highly profitable.
Related patterns: Ascending Triangle Pattern and Flag Pattern Trading.