Saturday, March 30, 2013

Trading Triangle and Wedge breakouts

Triangles, be it ascending triangles, descending triangles, or symmetrical triangles are common enough chart patterns that occur on all time frames. I am no chartist, and am not adept at entering trades when markets break out of these chart patterns. And even if I did get in through proper sell/buy stop placement, I was not clear about where to place protective stops. These images below should explain this process well.

Here's how one would enter the break of a rising and falling wedge, and the appropriate stop placement for it. 

Another article which explains this technique really well is here, this article explains how to set targets for triangle breakouts, but did not mention stop placement. The above images help with that part. 

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