Chart patterns are an important tool used by technical analysts to try to predict price moves of stocks and commodities based on identifiable chart formations.

There are seven basic chart patterns.
1) Symmetrical Triangles
2) Ascending Triangles
3) Descending Triangles
4) Head and Shoulders
5) Wedges
6) Flags and pennants
7) Rectangles

Symmetrical Triangles can be characterized as areas of indecision. A market pauses and future direction is questioned. Typically, the forces of supply and demand at that moment are considered nearly equal. Attempts to push higher are quickly met by selling, while dips are seen as bargains. Each new lower top and higher bottom becomes more shallow than the last, taking on the shape of a sideways triangle. (It's interesting to note that there is a tendency for volume to diminish during this period.) Eventually, this indecision is met with resolve and usually explodes out of this formation (often on heavy volume.) Research has shown that symmetrical triangles overwhelmingly resolve themselves in the direction of the trend. With this in mind, symmetrical triangles in my opinion, are great patterns to use and should be traded as continuation patterns.

Futures and options trading carries significant risk and you can lose some, all or even more than your investment.
Stock trading involves high risks and you can lose a significant amount of money.

The information contained here was gathered from sources deemed reliable, however, no claim is made as to its accuracy or content. This does not contain specific recommendations to buy or sell at particular prices or times, nor should any of the examples presented be deemed as such. There is a risk of loss in trading futures and futures options and stocks and stocks options and you should carefully consider your financial position before making any trades. The reference to statistical probabilities does not pertain to profitability, but rather to the direction of the market. The size and the duration of the markets move, as well as entry and exit prices ultimately determines success or failure in a trade and is in no way represented in these statistics. This is not, nor is it intended to be, a complete study of chart patterns or technical analysis and should not be deemed as such.

SYMMETRICAL TRIANGLE IN A NEW UPTREND (BULLISH)

Symmetrical triangle in an uptrend (bullish). Measure the base, add it to the breakout point and calculate your target. It doesn't get much easier than this.

SYMMETRICAL TRIANGLE IN AN UPTREND (BULLISH)

This was probably the biggest "gimme" I've seen all year (2001). Perfect Symmetrical Triangle in an uptrend. While I doubt anybody could have accurately predicted the date of the Government's announcement to stop issuing 30 Year Bonds, being in and getting "lucky" was a pretty good bet. Notice the enormous jump in volume too! This just goes to show that you don't have to know the news to take advantage of the markets. Just read the charts. Like the commercial says, ..."it's in there".

SYMMETRICAL TRIANGLE IN THE BEGINNING OF AN UPTREND (BULLISH)

The symmetrical triangle in the beginning of this uptrend signaled even better things to come. Notice the leveling of the volume during the formation of the triangle and the burst of activity on the breakout.