Double tops, triangles and head and shoulders
Triangles
Lesson 3 of 4 · about 8 minutes
3 questions, each checked the moment you answer it.
9 steps · about 8 minutes
The interactive lesson walks these ideas one screen at a time and checks your answers as you go. The text below covers the same ground for reading.
A triangle forms as price swings narrow
Each rally stops sooner than the last one. Each dip holds higher than the last one. The swings shrink between the two boundary lines, which is the narrowing this shape is named for. Traders watch for a breakout: price moving above the upper boundary or below the lower boundary. A triangle name describes how its two boundaries slope. It does not say which boundary price will break through.
A symmetrical triangle has lower highs and higher lows
Both boundaries slope towards each other: the highs step down and the lows step up, so the gap between the two lines closes from both sides. The width markers on the picture measure that gap at the start and near the end.
An ascending triangle has a flat upper boundary
The highs keep stopping at about the same price, so the upper boundary is flat, while the lows step up into it. The gap narrows because only the lower boundary is moving.
A descending triangle has a flat lower boundary
This is the ascending triangle upside down: the lows keep holding at about the same price, so the lower boundary is flat, while the highs step down into it. The gap narrows because only the upper boundary is moving.
A range keeps its width; a triangle loses it
Both shapes have an upper and a lower boundary that price keeps turning at. A range holds them parallel, so the gap between them is the same width at both ends. A triangle converges them, so the gap at the end is smaller than the gap at the start. Measuring the gap at both ends is how you tell the two apart.
A triangle on a real chart
Real price movements can be less regular than the textbook example. The labels mark the four turns the boundaries are drawn through: a first high and a first low, then a lower high and a higher low. The two brackets measure the first swing and the last one, so you can read the shrinking rather than take it on trust.