A symmetrical triangle bottom is a bearish continuation pattern. This pattern forms two trend lines that are symmetrical to the horizontal and convergent. The initial one is a bearish slant that gives support and the other will be a bullish slant that will create a resistance. To prove a symmetrical triangle bottom there must have oscillation between the two lines. Each line has to touch at least twice for validation.
A symmetrical triangle “bottom” is necessary so the movement that preceded the formation of the triangle is being bearish.
A graphical representation of a symmetrical triangle bottom is below:
The price of this pattern will be determined by its height from the base of the triangle so that its carried over the break point. A similar technique is to draw a parallel line from the resistance of the symmetrical triangle to the first contact point with the support which will obtain a bearish target price.
Some statistics about the symmetrical triangle bottom are:
– In 57% of cases, there is an downward exit.
– In 91% of cases, the bullish movement will continue after the breakout.
– In 57% of cases, the target price will be reached in case of a bearish breakout.
– In 60% of cases, a pullback occurs.
– In 16% of cases, there will be false breakouts.
The exit normally occurs towards 80% of the distance of the pattern.
A sharping and strong breakout gives better performance.
The performance is greater when the triangle is formed at the beginning of a trend.
Be sure to avoid taking a position if the breakout occurs before 3/4s of the pattern.
Pullbacks are harmful for the performance of the pattern.