Lotto

Thursday, November 21, 2013

Love Triangle - How to Trade a Triangle Pattern

Trading a Triangle pattern can be a dangerous trade, because unless you can see that price action is in a triangle pattern you are probably in the KILL ZONE.

Yes, like any love triangle someone gets hurt and in this case its your account.

The best way to trade the triangle is for a breakout out of the triangle lines. More advance traders will enter on the retest of the breakout.

Above is the EUR/USD,
as you can see I have drawn a nice triangle pattern with a clear break out that didn't go any where, until it retested the trendline and move backup to the level of the breakout high. Then BOOM
price rockets up to the previous high (or high of the triangle). 

The take home points from the price actions is that patterns do work, that retest setups move with strength.

However if you were trading in a smaller timeframe eg 5min, 1min you would be whipped sawed all over the place eg your longs would fail and your shorts would fail. This is the Kill Zone (KZ)
that will burn money and get you annoyed and stressed out.

Look for the KZ and wait for the market to give a good trade setup. :>