Trading Triangles - Grounded Trading - Technical Analysis Education
Hello traders Lord, ray with heightened crypto calm your, number one source for cryptocurrency, technical, analysis and blockchain, education, in this video we're going to be doing another episode of grounded, trading. This. Edition. We're gonna be talking about the, triangle. There. Are different types of triangles and we're gonna go, into each one, so. In, this video you know by the end of it you should be able to know. The difference between each triangle and how. To identify them, on the charts and then, how. To trade them so, let's. Get into it. So. What, are triangles. Triangles. Are either a continuation, pattern or reversal, pattern essentially. Triangles. Form levels of price contraction, the triangle forms from the price action nara's over several price swings if trend lines are drawn along the highs and lows of the price action the, trend lines converge towards each other this creates the appearance of, the, triangle, there are three types of triangles the ascending, triangle the, descending, triangle and the, symmetrical, triangle all these patterns develop in uptrend, or downtrend it. Is mandatory that you have two reaction highs and two reaction lows minimum, without, this criteria, met the triangle is not valid, the, ascending, triangle occurs, when the lower trendline is rising, or the upper trend line is horizontal this, shows that swing lows are rising but, their rallies are stopping near the same resistance level the descending triangle occurs, when the upper trim line is sloped to downward while the bottom trend is horizontal, and the symmetrical triangle occurs when both trend lines are moving towards each other with a form of convergence, the. First triangle we're gonna actually look at and draw hypothetical, here is the ascending, triangle okay. This. Is in its nature bullish. Okay, we're, gonna go into the price action and what goes on with it so, forgive. My drawing, but this. Is the best way to you. Know did the hypothetical, right so, let's, just say from an uptrend, right. You're making higher highs higher. Lows higher. Highs higher lows and then. We spiked, up and we hit this the cell wall okay. Right. Here and then we break down, to. Lower prices, and. Then. We come back up and, we hit the same cell, wall it's right there but, then when we break down again we. Actually make a higher low than our previous low and then we can hit that cell wall once again and. Then we break down into lower prices. And. So. What's. Going on all right now we just get our trend line out. And. Plot this right. Let. Me change up the color here real quick for you. Perfect. So. We. Have this the civil right some, market maker has put, it up and it's preventing the price from going higher but. After an uptrend. This. Is the, ascending triangle right we have, this as a bullish, continuation pattern. Okay so. When. You can't, find any more buyers and clearly, we can't push the price up, anymore as a buyer the price breaks down okay, and so, from there we establish, a low wherever it may be but. After we couldn't find any more sellers of course the buyers come back in push, the price to higher prices but, again, the cell walls here can't. Budget so. We sell off again but when we break down we have a higher low, than, our previous low so. From. There once, again we try but the cell wall is too great we, break down again but then hey there, a time now we've. Made a higher low but, we made you know two consecutive, higher lows and a previous, or our first low right, so you, have your reaction, low so we talked about two, up top and two at the bottom validating.
It And making this a textbook, ascending. Triangle pattern so, what happens why do we see nice jumps, up at the, end of these triangles, well. This seller whoever, it is sees, the accumulation, this. Is also we call buying pressure and so, with this buying pressure this. Person. This market, maker whether. It's an institution, or it's just a person, but, with BOTS they they. Get nervous and they they don't want to be in the, way of this anymore because they know that they could get wrecked if they, don't uh let. Go but this one person or this one institution, with this cell, wall they lift it up and once they lift up that, cell wall from, all this accumulation, we see huge spikes in, price, okay. And so. The. Same can be said, okay. This is a bullish, continuation, ascending. Triangle okay. We. Also have a, bullish. Reversal pattern. Right so we. Have. A make, lower, highs lower lows lower highs lower lows in the downtrend. We come up when we hit a high and. We break down to lower prices again, oh nothing new there but, we come back up we, form, the same high. Right, we hit a cell, walls been put up but when we break down, accumulation. All. Right the same thing same, cell wall break. Down to lower prices. And. We, again. Have formed two, consecutive. Higher. Lows than our previous low. And, three. Times now we try, to push. This price out we couldn't do it but. You. Know with this market, maker here with their cell wall they get nervous and they, don't, want to be in the way when, this does break, out because there is so much buying pressure and accumulation, that's what these, upward sloping trend lines signify. And represent on on the charts, right so from their break. To the upside, so. We have a we. Have two different forms of the ascending triangle the. Ascending. Triangle. Continuation, and then the ascending, triangle reversal. So. Let's take a look at a real-life situation. Of, a, triangle of an ascending, triangle and then talk about how to trade it all. Right so we're looking at Bitcoin to the US dollar on the daily. Chart, if, the Knicks exchange all the way back to 2016. If we look back here we had this period a one-year. No. Trend period, we were range bound but, then eventually we broke out a kilos resistance, here and from. There we, spiked. Up we came down we touched our previous level of. Resistance use it as support on, very, high levels of volume signifying, possible, trend reversal, we'll. Get into that later you know another time but what, I see going on here, that's. What we talked about right. Accumulation. And. I like using the horizontal line here just helps me like. Using the candle body closes, and also, the, wicks, so. I see this week and this can of water close I'm disregarding, this, exaggeration. So as you can see a clear. Two, reaction, highs really, three, reaction. High, multiple. Reaction, lows. Bouncing. Along this area accumulating. Behind. Pressure is occurring okay and this is a daily. So this is a very significant, pattern that was developed, and it all started, really, down here. November. Of 2015 all the, way to, May, 7th. Of 2016. Very. Long time many months, this pattern developed, and that's, the thing the slower. The time scale the, longer, the pattern develops the way it's, gonna be way more significant, than the shorter time scale patterns, so this is an ascending triangle on the daily okay, so from. There we made. A 1 reaction low to, 3 for a ton, right just mini and then we made 3, reaction eyes alright so valid, sitting, triangle what happened. Broke. To the upside and there, we went. So. You. May ask. How. Do you trade these how. Would you trade an ascending triangle with no Fibonacci no. Other tools very. Very, simple, so get your measuring tool over here you got from your widest area of, your triangle you. Measure all the way to the top ya. Could. Say this would be the top because of the wick it's, fine. 170. To make sure you, measure from that breakout then 172. This. Is back when Bitcoin was at 100. $467. 172. Measure move up this, was your target. Of. Course, it went a little higher they're gonna go higher but just think about like this if you traded this and took your profit and you spent, a few.
Weeks. You. Would look this is a the. Sixth or excuse, me June, of. 2016, if. You wouldn't you to be mad at me for a little bit then you'd have broken down alright. Just chopped around for a while and then broken and you, know that was June 6th and. You. Wouldn't have seen the same price again until October, okay. So taking. A trade short-term, there's, nothing wrong with it because. It takes months many months to get back to those levels once you break down like that it's very possible so, this, is just a rough. Estimate a rough, way - the. Best one of the best ways to trade, these, ascending. Triangles, alright, so the next triangle, we're gonna make. Hypotheticals, with the descending. Triangle okay so it's, essentially. The inverse. Of an ascending triangle right so let's, just say from a downtrend, right. Lower lows lower highs lower. Lows lower highs, lower. Lows. Then. All of a sudden you. Come up and you make a high. And. Then you hit, this, wall. Right this huge, by wall but, then you come back up, break. Down to little prices, same. Wall. Here, and. Again so. We. Plot this. Okay. So. A descending, triangle. Okay. What happens on the price you have, a downtrend, you, make a high you, come down you hit this buy, wall okay, I. So once the sellers realize they can't move the price any lower the, buyers come in they, make a high but the high is lower, than his previous eye so, when you when. The buyers figure out they can't run, the price any higher we break down to lower prices but again that buy walls they're preventing. The price from going lower so again we, move, back up but we make a lower high once again we have now created and established, a validated. Descending. Triangle, come. Down once again and then from there, anything. Can happen you know we don't have to hit this eye again because it's valid and then normally, this, is the price. Action that you're getting okay so that is a. Descending. Triangle, in, a continuation. Form, continuation. Descending, triangle okay. So. Now real quick just to show you we also can have this in a. Reversal. All. Right so you're making higher highs higher lows higher highs higher lows pick, a high. You. Hit this level make. A lower high. Samwol. And. Then from there alright okay. So you run, up in price you hit a high you, can't find it more buyers you break down there's a bio wall here protecting you. Know the price from falling to lower prices you come back up and make a lower high do, the same thing over and over and then, from there the.
Reversal. Okay. So, now. We're gonna look at a real, world example, of a descending triangle how, to trade it are. We looking at icx to, Bitcoin finance, exchange one-hour chart, looking. For a descending, triangle. Do. We get find one. -, reaction highs. Multiple. Reaction lows, you. Can see the development, that downward sloping, trendline, that. Would can eventually converge, into. What. We're looking for you know our. Pretty. Much straight line so, what, happened when we started forming that. All. Right just keep going down like that keep. Can't they keep this going right then. From there we broke out. This. Never, there we broke down, to. Continue, going down, its. It descending. Triangle, after. An uptrend, signifies. A, reversal. Okay. So, you can see it here it didn't last very long but these normally. They go about 50 percent of the way. 75. Percent before they break to the downside so. Two. Reaction eyes multiple, reaction lows and how, would you trade this if you were going short. These. Are normally shorting, tools right, so you, would. First. Off let's get the measure move how far should this go on. The breakout widest. Area of the triangle it's. About 400 satoshis, okay. Well. We broke out. 400. Satoshis that's. The measure move down here. Go. Right. There right around there. Here's, our targets. Okay. There we are. So. Uh look, what we did get. The measure move perfectly, bounced, off -, how how insane is that so. Uh look. You can have these and up trends or downtrends, they're always normally. They. Always normally have a bearish hue to them so. So. Yeah we we hit targets, that's normally, where you'd short at the top of these right if you you, know normally this we'd like that one more, try. This one, more, lower. High would, be ideal in this situation, if you were wanting to go short on this you. Go short at the top is your best risk reward from, there you have all this area you could break down knowing. The context, of a descending triangle, we have all this area we could break down and then break to, make the measure move and make, a ton of money on this trade with, a short so. Ascending triangle nice, buying opportunities, to the bottom. Descending. Triangles great opportunities, short at the top so, that's it guess so now we're going to pretty. Much plot a hypothetical symmetrical. Triangle and talk about what kind of price action goes on and really everything, behind it so all. Right so let's just say for instance, on. The symmetrical triangle you're.
Making Higher highs higher lows whatever, but, then you, make a much higher high. You. Know much lower low, from. Your previous high make. A lower high. Then. A higher low, and. Another. Lower. High then. Another lower low. Okay. How. We plot this breezy. From, the bottom. Just. Like that so. This is our symmetrical, triangle, at, its heart. It, is a mmm. Neutral, pattern that. You, must be very careful of, normally. The, way you can look at it but you have to have confirmation. Don't. Assume on these things do not assume they. Can easily make a fool out of you I've, seen, these. Symmetrical, triangles break to the upside down surround, then, you. Think maybe you're going to the upside and then it breaks down all right so get confirmation, on these. Uh these, symmetrical triangle because they can be tricky so, but they they're pretty. Much just price contraction, you have a two. Consecutive. Higher. Lows and then, two, consecutive lower, highs and it's. Just your, coiling, up getting ready to make a move that price contractions very real and it's, that's why it's neutral because it's. Equal on both sides and so, with that, normally. After an uptrend it can, signify, a, bullish. Symmetrical, continuation. Pattern but. It can just as easily, be. Used as a. Bearish. Symmetrical triangle reversal, pattern after an uptrend so you have to be careful and always get that confirmation on these breaks, so, could do that, or. It could just of, course be the bullish. Continuation like, we talked about right and. It's the same thing with. From. The downtrend right don't. Want to get too. Redundant, for you. All. Right but you need this. Price. You make a, consecutive. Lower highs and consecutive. Higher. Lows right, then, from there it can either be you. Can come out here like this bounce. Off for a while and then. Break to the upside, head, fake right or. It can do the same thing where I can. Break. To the upside like this bounce around for a while loops and then, break down right so you, can get either. Or here, so again wait for confirmation on these they can be way more tricky, than the ascending triangle and a descending triangle okay, so, now, let's get into a real world, and learn how to trade these things, alright. So now we're gonna, be looking for a. Symmetrical. Triangle. Looking. At. BTS. It's. A Bitcoin. Okay. One-hour chart, and I, think, we can see one right. We. Have our high up here first fraction I second, reaction I third.
Reaction Hi. Then. Price. Contraction, with a reaction low here second. Third fourth, multiple, reaction lows, here, okay. So, you can clearly see the. Prices the rate of change is getting smaller and smaller okay. Getting ready to make a move to, the upside or downside and, let's see what happens and it was after remember it was after an uptrend so as we discussed and. The hypothetical. Has. A bullish, hue, to it right there's a possibility this could be a bullish symmetrical. Triangle. Continuation, pattern right, tom. Plays out. And. There you have it. Call. With the upside. There. Kiss so we just connect. These up real quick. Very. Recent pattern Bitcoin. I. Had. A lot of volatility caused, us to come back and spike, spike. Off this stopped. Out a bunch of people hmm interesting, stuff, but. Alright. So with this how do you trade these pretty. Simple, get. Your measuring tool the. Widest. Areas of the triangle of course 294. Satoshi's from the breakout or with wherever that was. 294. Of course, it went much higher but, this is to give you a Russ or a rough, estimate, and it's, a. Simple. Form. There are other ways of getting profit. And we're gonna make videos about that too okay this is just your, measure move if you want to make profit you're new at this this, is the way to do it okay so. When. We hit this level, course. Moved. Up a little bit more and we broke down below, you, know if you exit the trade or whatever you make your money we, break down you want to worry about this kind of stuff of course we kept going because this was, different. There's not we're, not looking at the context, of the coin going, through a possible, all corn spring right now okay but, for the sake of this video. How. Do you trade these well, the absolute, best area to trade symmetrical. Triangle if you're bullish. Right. Here right. At the you start finding support you had plenty of area, plenty, of time, to. Buy at the bottom okay. We. Have a bullish hint of the. Symmetrical triangle, so, taking the lowest risk would, be at the, bottom of the upward sloping trendline. And. So. Pretty. Much from there the rule of thumb would just to be having. Your stop-loss a little bit lower than your previous lows which we're here so, you could have a pretty tough, tight stop-loss, it. Moves up okay. Anything, happens. See. Right here this is this wick right here we didn't get stopped out of the session a patreon. Trade. Let's, get our risk to reward real quick. Right. Here all right here. You said her stop. Something. Right there, so. Very. Very close to getting stopped out but, this is why you. Have to be. As loose as you can on your stop-loss don't, be crazy but I got people, got so close to getting stopped out right there that's insane, so you should be mindful about your stop losses be you can be a little bit more liberal a little loose but people, could have gotten stopped out right here and then it just broke to the outside hit target so. From. There the best opportunities, always lie here. And of. Course your, targets gonna be here your risk to reward ratio is, gonna be eighteen point two five to one and that literally, played out for us this is literally a trade we made like, three. To four days ago so. Alright. So that's a those are your three triangles, so, you know we talked about the beginning of the video. What. You, know what our goals were going to be for this video it was gonna be being. Able to identify a. Triangle. Whichever one it was being. Able to plot it and then. Knowing. How to trade, the triangle, okay so I hope you enjoyed this video, grounded, trading session on triangles, enjoyed. It hit that like button that bell that sub you. Want to learn how to be a better trader chew on our patreon page it's. In. Our description below and, check, out our youtube hype a youtube, live page where, we go live every, day 3:00. Eastern and 11:00, p.m. Eastern, so. Until, next time stay. Hyped. You. You.