The concept behind the graphic pattern is that, apparently, about 70% of the time the markets are not in a trend period, but rather are in a period of consolidation. During this “no trend area” is generally recommended that you do not face any trade, but rather wait for the price to take a direction.
The Pattern graphics are meant to highlight these moments of breath, so you can predict when the range is about to end, and so take advantage of the breakout. The latter occurs when the price of moves outside the parameters of support and resistance, moving in the direction taken until they find a new trading range side.
The graphic patterns are very useful for all traders who have acquired good technical skills. This is due to the fact that, using the graphic pattern, your decisions are based on information contained in the charts and not passed on subjective assessments or reference indicators.
One of the most common patterns among the graphic pattern is represented by the triangle pattern. A graphical model of the symmetrical triangle is defined as the model that is created by the slope of the high prices and the slope of the minimum prices that converge together at one point forming a triangle. To more easily identify a triangle you must seek points of support and resistance, and in particular those that are not perfectly parallel. Then you draw the lines of higher prices and then lower ones, and if they meet at a point we got a triangle.
These models are more easily identifiable in a period of at least one day. You will notice that the tip of the triangle will be directed always to the right. And it’s better not to make any trade when the price is within the triangle, be patient, and wait for the breakout. In the example below you can see a trade between the Australian dollar and the Mexican peso. The yellow lines begin at the widest point between the high and low and converge together as a price range that is narrower.
After that, you can see that the Bears win their battle as the price began a downward trend. We can see the green lines that indicate where to put the Profit.
A breakout from a symmetrical triangle will last about the same amount of pips as the widest point of the triangle. The stop loss should be placed near the tip of the triangle just above your entry point.
In this way, a graphic pattern can solve a lot of work outside of your trading system by showing you where to set the stop loss and take profit.
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