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Key Takeaways
- A triangle forms when a trendline across the highs and a trendline across the lows converge, narrowing the trading range over time.
- The three common variants are the symmetrical triangle with two sloping boundaries, the ascending triangle with a flat upper boundary, and the descending triangle with a flat lower boundary.
- Trade the breakout on a rule set in advance: the example buys a close above the upper boundary, $104.60 against the $102.90 line.
- The target adds the triangle’s $10 base to the $104.60 breakout close: $114.60.
- Track sloping boundaries at each observation. Keep a fixed stop reference separate from a moving trendline.
What is a triangle pattern?
A triangle pattern is a chart pattern in which a trendline across the highs and a trendline across the lows converge, narrowing the trading range over time. A symmetrical triangle has falling highs and rising lows. An Ascending Triangle has flat resistance and rising lows. A Descending Triangle has flat support and falling highs.
A breakout in the direction of the preceding trend is a continuation; a break against it is a reversal. Pick the chart interval and session, mark the swings that draw each line, and set the breakout rule before price gets there.
How to draw triangle boundaries and measure the base
In this example, the first swing high is $108 and the first low is $98. The upper line falls and the lower line rises. At the breakout observation, they are $102.90 and $101.60, a $1.30 vertical separation.
The $10 base spans the initial swing high and low, two different bars; the $1.30 gap between the lines at the breakout measures how tight the range has become.
Each later swing high touches the falling line and each later swing low the rising line, until the $104.60 close breaks out.
Formula
Selected base height = initial swing high − initial swing low; upside target = selected anchor + base height; downside target = selected anchor − base height- The base is the first swing high minus the first swing low, measured across the two bars where they printed: $108 − $98 = $10.
- The anchor is the $104.60 breakout close, giving a $114.60 objective.
- The gap between the lines on a single bar shows how tight the range has become: $102.90 − $101.60 = $1.30 at the breakout.
- The apex is the intersection of the extended boundaries.
Triangle breakout target and trade example
XYZ advances from $92 to $108, then forms lower highs and higher lows. At the breakout bar, the upper boundary is $102.90 and the lower boundary is $101.60. Price closes at $104.60.
- Triangle height: $108.00 − $98.00 = $10.00
- Base height is $10; at the breakout bar the two lines sit $1.30 apart
- Breakout close: $104.60, above the $102.90 upper boundary
- Measured target: $104.60 + $10.00 = $114.60
- Entry $104.60 with a fixed stop at $102.90 risks $1.70; $10 target distance / $1.70 = 5.88
The example advances to $112, a $7.40 gain on the $104.60 entry and $2.60 short of the $114.60 objective: take profit near the target or trail a stop once price runs. The fixed $102.90 stop stays put while the upper trendline keeps sloping down.
Book the result from the actual exit fill, since a closing-rule exit fills wherever the next price prints.
Triangle invalidation: tracking the sloping boundary
The upper boundary continues downward after the breakout. At the next bar it is $102.58, and the lower line is $101.86. A $102.80 print sits below the old $102.90 reference but still above the current upper line.
So that print hits a fixed $102.90 stop while price stays outside the triangle. Pick one rule before the trade: the fixed stop, or a close back inside both current lines.
Triangle breakout confirmation: volume and volatility
Use Relative Volume to compare participation and Average True Range to compare price distances. Measure volatility from the chosen observations and check the actual option chain for implied volatility and premium. In the Options Profit Calculator, price each structure at the $114.60 objective with the chain’s implied volatility, then raise the volatility input to see how each one responds if the breakout expands it.
Limitations of the triangle pattern
- Mark the swings on the interval and session you trade, and keep them. A different choice draws different lines and moves the breakout price.
- Let the breakout close pick the side, and plan the exit for a failed breakout that returns inside the pattern.
- Plan profit-taking around the measured move. The example reaches $112, $2.60 short of the $114.60 objective, so take partial profit or trail a stop as price runs.
- Check the line’s value on the current bar. The upper line falls from $102.90 to $102.58 one bar after the breakout, so a $102.80 print sits below the old level and above the current one.
Bottom line
A triangle pattern frames a narrowing range between converging trendlines and turns the breakout into a defined trade with a measured target. Mark the swings on one interval, choose the activation rule and target anchor in advance, and keep a fixed stop reference separate from the moving boundary.
Clear answers
Frequently Asked Questions
Sources and Further Reading
- Fidelity Research Help: Technical Analysis (classic patterns and trend lines)
- Fidelity Help: Advanced Charts (classic pattern catalog, continuation triangles)
- Fidelity Viewpoints: Charting a Path to Success
How entries are sourced, calculated and updated: editorial methodology.