Theta, Psychology of the triangle patterns

Theta, Psychology of the triangle patterns

ascending triangle .

This triangle is said to be a triangle with the highest possibility of upside breakout

It is because in this pattern, the upper boundary(resistance) is flat while the lower boundary (support) is rising

The flat upper boundary signifies that bulls maintain their strength.

The rising lower boundary implies that bears are getting weaker.

Here are all three patterns in comparison

Thus, A descending triangle in contrast can be said as a triangle that is more likely to have a downside breakout due to its flat lower boundary and declining upper boundary.

Triangle patterns can both serve as continuation and reversal.

To identify whether the triangle is either a continuation or reversal, the height of preceding trend and the triangle need to be taken into consideration.

If the height of the triangle is ⅓ or more of the preceding trend, then the triangle is likely to be a reversal.

Thus, if the height of the triangle is less than ⅓ of the preceding trend, then it is likely to be a continuation.

In Theta Chart, the ascending triangle height is 2.3 and the preceding trend height is 4.5.

Therefore, the ascending triangle is likely to be a reversal: the height of the triangle is more than ⅓ of the height of the preceding trend.

However, position will be entered when Theta has broken out from its resistance or triangle upper boundary. Currently, theta is at its resistance which makes buying it now risky.