Finding a relatively safe, simple, and reliable mechanism to trade the markets day in and day out is not easy. There are a lot of "black-box" systems out there that claim good results, but with a closed system you never fully understand how it works and under what conditions it might fail. Also, in that environment you will never actually learn how to trade by making your own decisions.
One of the first books recommended to me when I first became interested in trading/investing was
Technical Analysis of Stock Trends by Edwards and Magee, and it is one of the few that I still refer to today. While the examples in the book are quite old, the methodology outlined in the book (specifically with regard to support and resistance and trading price patterns) still holds true in the modern markets.
Price patterns, such as the triangle, are well documented, they occur frequently in all securities and time frames, and are relatively easy to trade for newbies and veterans alike. They are particularly prevalent in the Forex market which, of course, is quite popular at the moment.
The triangle is a consolidation pattern and it can occur at any time. The best triangles, though, are those that occur during a strong trend (bullish or bearish). After a strong move the market will take a breather and consolidate for a period of time before resuming the previous trend. This consolidation often takes the form of the
Triangle pattern which is a series of diminishing coils typically with diminishing volume.
As the price action nears the apex of the triangle a breakout will occur on higher volume. The breakout is expected to be in the direction of the prior trend, the price target is the breakout point plus the overall height of the triangle, and the stop is typically placed at the most recent swing low/swing high just prior to the breakout. If you scan through charts for almost any symbol, and on any bar interval, you will see this happen over and over again.
The
Triangle Pattern for TradingView indicator automates the triangle identification process. It looks for price action that typically indicates the beginning of a triangle formation, and it draws an outline giving you an idea as to the height and the length of the pattern (it will also trigger a
TradingView alert). Not all patterns found by the indicator will develop into actionable triangles, but a good number of them will. And as long as you follow a few basic rules (outlined in the User Guide) you can generate a good number of trades per day just by monitoring a small basket of symbols/intervals.
More information is available in the
User Guide. The indicator itself is available on our
Products page...just select the
TradingView category in the indicator section.
Divergence Software, Inc.
www.sr-analyst.com
support@sr-analyst.com
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