Sometimes it’s rather difficult to predict future market behavior, whether it will move upward or downward. The Triangle strategy can help to figure out what direction the market will choose.
The Triangle strategy is based on a graphical pattern in the shape of a triangle. There are two types of triangles – namely, ascending and descending.
The strategy lies in that you have to catch particular moments when the price moves away from high volatility, and the range of trading narrows:
The pattern looks like a triangle. As long as the trend stays within the triangle, it’s better not to trade. However, if the trend line breaks above the triangle, start trading in the direction of the breakout.
The rising triangle is formed when an upper line of the triangle is resistance. The support line is at the bottom and gradually rises to meet the resistance line. In the ascending triangle there can be up to three price waves, that is, three waves of ups and downs. After the third wave, the pattern is considered completed, and the price breaks the resistance line from the bottom upward. This is the moment when you should buy a CALL option.
The descending triangle pattern is formed when the trend is descending. It assumes that you should buy a PUT option. In the descending triangle the support line is at the bottom.
As in the ascending triangle, there can be formed up to three waves. The third wave is to break the support line. This is a signal for a trader to buy a PUT option.
Sometimes, the symmetrical triangle is formed on the chart when resistance line touches the highs of the downward trend, and the support line а, а the support line hits the lows of the ascending trend.
This pattern is neutral, which means that you can’t sell or buy because a future direction of the trend is not clear, and you don’t know whether the price will rise or fall. In this case you should wait until the line breaks the sides of the triangle.
If the top of the triangle or, to be more specific, the resistance line is broken , then it’s time to buy a CALL option.
The breakout of the bottom of the triangle or, in other words, the support line means a signal to buy a PUT option.
Unlike the “Two chairs” strategy, the Triangle strategy for trading binary options doesn’t require any additional chart instruments. All you need is just to visually assess the chart. Look at these charts to find Triangles and easy generate a profit from binary options.