Trading the triangle chart pattern in the oil chart is the very profitable trading strategy. Professional trader’s uses ascending triangle chart pattern to trade the uptrend market and uses descending triangle chart pattern to trade the bearish market.
Statistics shows that almost ninety percent of the time the breakout occur in the direction of the prevailing trend. Once the pattern successfully completes its formation professional traders wait patiently for the valid breakout in price movement.
Let’s see a triangle chart pattern example in oil chart:
Figure: Trading the ascending triangle chart pattern in oil
The initial price movement in the triangle chart pattern is wider and it gradually becomes narrows with the course of time. The upper line of the triangle acts as strong resistance zone while the bottom part of the pattern acts a strong support zone.
In the above figure, the price successfully completes the ascending triangle pattern. The ascending triangle pattern is found in an uptrend while the descending triangle pattern is generally found in a downtrend. Once the price breaks the triangle top resistance traders enter long, setting a tight stop loss below the triangle support.
After the successful breakout in the direction of the trend, the price moves strongly making new higher highs in the uptrend. The success rate of trading the triangle pattern is so high that many new traders often don’t use proper risk management system while trading this strategy. It is imperative that every single trader takes the trade with proper risk reward ratio to avoid major capital loss.