Triangle Pattern Trading Guide: Entry, Stop Loss, and Risk Management for 4 Chart Patterns

In Technical Analysis, the triangle pattern is an unavoidable topic. Today, let's take a look at how to play with 4 common triangles - descending triangle, ascending triangle, symmetrical triangle, and expanding triangle.

Descending Triangle: Bearish Signal

The pattern characteristics are very clear: there is a downward sloping resistance line above and a horizontal support line below. In simple terms, it means that the sellers are gradually pushing down the price.

How to Trade:

• When the support line is breached + trading volume increases, you can consider opening a short position.
• The stop loss is set above the recent rebound high.
• Close the position at the previous support level or lower.

Avoid Pitfalls: There are especially many false breakouts with low trading volume, so wait for volume confirmation.

Rise Triangle: Bull Trap

It has reversed - the line above is the horizontal resistance line (where the price has been pushed back repeatedly), and the line below is the upward sloping support line (with increasingly higher lows, indicating that buyers are gradually accumulating positions).

How to Trade:

• Enter long positions when breaking above the resistance line + when the volume increases
• Set the stop loss below the support line
• Close positions at the next key resistance level

Key Point: This pattern performs best in a rise trend, with a higher success rate.

Symmetrical Triangle: Waiting for Breakout

This is a “neutral faction”—the rise and fall lines converge simultaneously, and the price oscillates within a shrinking range. It may break upwards (bullish) or break downwards (bearish).

How to Trade:

• Don't jump the gun, wait for a clear breakout direction before entering.
• Open long upon breaking above, open short upon breaking below
• A decrease in trading volume usually indicates that a breakout is about to occur.

Stop Loss/Close Position: Observe the direction of the breakout and set the stop loss outside the last line in the opposite direction.

Expansion Triangle: High Volatility Warning

The pattern is becoming more open – the support and resistance lines are separating like open scissors, and the price fluctuations are getting larger. This usually occurs before high-risk events or in extremely uncertain markets.

How to Trade:

• Higher risk, exercise caution when entering.
• Wait for the breakthrough confirmation before taking action
• Set the stop loss at the outermost point of the pattern

Tip: This pattern appears most frequently when volatility is at its peak. Be especially cautious before news events or important releases.

Core Rules of Trading Triangles

Volume is king. A breakout must be accompanied by an increase in volume; otherwise, it can easily be a false breakout that backfires.

Trend is direction. An ascending triangle paired with an upward trend, and a descending triangle paired with a downward trend can significantly improve accuracy. Using these patterns randomly in a sideways market greatly increases the likelihood of losses.

Risk management is crucial. Always set stop-loss orders, especially in high-volatility patterns like expanding triangles. A single liquidation can wipe out all the profits made previously.

Learn these 4 patterns, and combined with on-chain data and capital flow analysis, the technical aspect can basically be deciphered. In the end, it’s still the old saying: knowing does not equal to being able to use it; practicing more in real trading to find your own rhythm is the most important.