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I wanna talk to you about the most annoying pattern in the multiverse.

The thrice-damned fuckery of the TRIANGLE PATTERN.

Key to understanding triangles is that they are the pattern of confusion, of morphing and changing.

The LEAST reliable of all the major patterns, some are even more fucked (technical term) than others. Let me explain why.

A TRIANGLE REPRESENTS A DECREASE IN VOLATILITY

Read more about this in my Price Action course.

Like here (in XRPUSD aka Ripple recently)

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What typically happens in decreasing volatility? Patterns become unreliable, technical analysis of all types becomes more difficult, and it degenerates into a choppy mess.

Look at what happened. It broke to the upside and faked everyone out. Which will most likely cause a BIGGER move to the downside.

Rut Roe.

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Triangles which go right down to the point before resolving are SHITTY PATTERNS. In fact a very useful rule of thumb is that if the distance of the breakout point to the widest point is less than 70% you should stand aside.

Like gold recently. See how it got right down to the pointy bit before resolving to the downside?

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OK so symmetrical triangles which get right down to the point are a poor bet. Got that.

Let’s look at the other key ways that triangles will fuck you around.

Triangles are inherently prone to morphing and changing, like the 10 year which I’m still short (for the last month or so)

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Easy. When your triangle is too close to the pointy bit to be reliable, wait for a RETEST of the breakout.

Like here in ZN, today. This is a nice setup. Huge risk reward.

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I’m back in the office for the next month or two, so if you want to talk to me about mentoring, grab something on my calendar and we can talk about whether you and I are a good fit. Otherwise, check out my Price Action course first and see if it fits what you’re looking for.

All the best

Scott

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Scott Phillips

Scott Phillips

A professional futures trader, Scott makes his living from the currency and futures markets as a systematic trader. Living in Brisbane, Queensland, Australia, Scott provides coaching services through his website - www.scottphillipstrading.com

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