Know the Candle Formation: Triangle and Flag
There are many patterns or formations that we know in the world of forex. The good pattern of one candle, two candles, three candles or more than three candles (formation). In this article, we will briefly discuss two patterns that became popular and often used by most traders.
Triangle Pattern (Triangle)
The triangle pattern may indicate a potential trend reversal, but the most common is the trend continuation pattern. There are several different types of triangles, each with its own unique characteristics and predictive implications.
You must open / entry positions as soon as the price action passes the boundary of triangular convergence.
One way to estimate the extent to which prices will move after a breakout of the convergence boundary is to measure the base distance of the triangle and then add that distance to the level at which the breakout occurs.
This triangle pattern has three different forms, namely symmetric triangle pattern, ascending triangle and descending triangle. This symmetric triangle pattern illustrates a narrowed price pattern with the convergence line moving symmetrically. The ascending triangle pattern, where the lower boundary of convergence is increased and the upper boundary of convergence is flat. While the descending pattern is the opposite of the ascending triangle pattern. The implementation of the breakout strategy in this pattern is the same.
Pattern Flags (Flags)
Pattern or flag formation is an advanced pattern or consolidation pattern that typically displays periods of sideways with a slope opposite to the main trend.
The pennant pattern is very reliable. They almost always consolidate the prevailing trend and rarely signify a trend reversal. Like the triangle, a trader must open or position entry after breakout its boundaries. As with other continuation patterns, flags often occur near the middle of the primary trend.
Of the two patterns or formations, it must be approved first. So it is often called a continuous pattern of trends. Providing existing strategies and patterns, not predicting the price target will move. However, in both of these formations, triangles, and flags, we can get a target price that can be obtained after an escape.