Triangle are usually considered to be reversal patterns because they represents the tag-of-war between buyers and sellers that becomes more intense as time passes. There are several types of triangle formation and each has a different probabilistic deductions on the share price. In this article we will discuss about symmetrical triangle.

Symmetrical triangles are formed by two trend lines with the resistance drawn across declining tops and the support drawn across rising bottom. Although the term 'symmetrical' implies that the two lines must converge on equal angles, in practise any triangle with declining resistance and rising support is considered a symmetrical triangle.

A symmetrical triangle implies that the bear is getting more bearish while the bulls are getting more bullish. Hence, it is just a matter of time that one camp will triumph over the other. If the price breaks above the resistance, it represents a buy oppotunity. Conversely, a sell oppotunity is signaled if the price breaks below the support.

Below is an example of symmetrical triangle that appear in DBS in year 2000. The bulls eventually lost to the bears.

It is important to note that after a breakout, there is no guarantee that the price will continue to move in the breakout direction. One important development to watch is hence the retracement or snapback towards breakout point and re-enters the symmetrical triangle. If this happens, there is a high probability that it was a false breakout and cut loss is the most logical action.

Below is an example of Labroy Marine which has 2 false break out before the bulls finally triumph over the bears.