Triangle Pattern Trading

Triangles describe converging swing boundaries. Treat breakout direction as unknown until price closes beyond a boundary.

Pattern Structure

Ascending Triangle (Bullish Bias)

• Flat horizontal resistance + rising lows — bullish bias is a hypothesis

Descending Triangle (Bearish Bias)

• Flat horizontal support + lower highs — bearish bias is a hypothesis

Symmetrical Triangle (Neutral)

• Lower highs + higher lows, converging — condition results on trend rather than assuming direction

Workflow

1. Get Swing Point Data

Identify at least 2 swing highs and 2 swing lows (4+ total touch points):

get_candles_around_date(symbol=<symbol>, exchange=<exchange>, interval=<interval>, date=<swing_date>)

2. Draw Converging Trendlines (2 parallel calls)

# Upper trendline (connecting swing highs)
draw_chart_analysis(action="create", drawing={
    "type": "trend",
    "points": [
        {"time": <high1_time>, "price": <high1_price>},
        {"time": <high2_time>, "price": <high2_price>}
    ],
    "options": {"text": "Triangle R"}
})

# Lower trendline (connecting swing lows)
draw_chart_analysis(action="create", drawing={
    "type": "trend",
    "points": [
        {"time": <low1_time>, "price": <low1_price>},
        {"time": <low2_time>, "price": <low2_price>}
    ],
    "options": {"text": "Triangle S"}
})

For ascending: upper line is flat (resistance type instead of trend). For descending: lower line is flat (support type).

3. Confirm and Enter

Check volume declining during formation via get_indicators(indicator_code="mfi", symbol=<symbol>, exchange=<exchange>, interval=<interval>).

Standard: Enter on break + candle close outside triangle with volume spike. Stop inside triangle on opposite side. Preferred: Wait for breakout, then retest of broken trendline. Enter on rejection. Target: Triangle height at widest point, projected from breakout.

Evidence and Validation

• Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.
• Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.
• Include spread, fees, slippage, borrow or funding, partial fills, and latency. Reject the setup when net expectancy is not positive or depends on one narrow parameter.
• Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.
• Research basis: Lo, Mamaysky & Wang supports systematic pattern recognition; direction, breakout buffer, and target rules still require out-of-sample calibration.

Key Rules

• Minimum 4 touch points (2 per trendline) to validate
• NEVER enter on a wick breakout alone — wait for candle close outside
• If using trend direction or apex timing as filters, freeze their definitions and verify their incremental net expectancy
• Report width in ATR units and breakout location as a fraction of time-to-apex; do not infer strength from width alone

Related Skills

• wedge-patterns — Similar converging lines, both slope same direction
• flag-pennant — Pennants are small symmetrical triangles