# Breakout Triangle Strategy — What Is It?

Last Updated on August 25, 2022 by Oddmund Groette

The triangle pattern is one of the common chart patterns you will encounter when analyzing stocks for short-term trading, and the most reasonable way to trade the pattern is the breakout strategy. What is the breakout triangle strategy?

**The triangle breakout strategy aims to trade into a trend continuation following a price breakout from a triangle consolidation pattern. With this strategy, the trader tries to go long when there is an upside breakout of a triangle pattern in an uptrend, or go short when there is a downside breakout of a triangle pattern in a downtrend.**

Keep reading to learn more about this strategy.

Table of contents:

**What is a triangle in trading? **

A triangle is a continuation chart pattern that has the shape of a triangle. It represents a consolidation in the price trend and is formed by narrowing price swings. Attaching a trendline across the swing highs and swing lows gives the shape of a triangle. The triangle is widest at the beginning of its formation, but as the market continues to trade in a sideways pattern, the trading range keeps narrowing until the price breaks out of either the upper or lower boundary.

The triangle represents a temporary pause in the market, both from the buy-side and the sell-side — the supply line diminishes to meet the demand. The upper boundary of the triangle represents the supply line (resistance level), while the lower boundary represents the support level or the demand line.

Being a continuation pattern, the price is more likely to break out in the direction of the trend preceding the formation of the triangle pattern, although it can occur in either direction.

**What is the breakout triangle strategy? **

The triangle breakout strategy is a trading technique that aims to trade the continuation of the prevailing trend following a price breakout from a triangle consolidation pattern. With this strategy, the trader tries to go long when there is an upside breakout of a triangle pattern in an uptrend, or go short when there is a downside breakout of a triangle pattern in a downtrend.

**What should be the target of a triangle breakout? **

The target of a triangle breakout should be the same size as the base of the triangle. So, to get your target when trading a triangle breakout, measure the base of the triangle and then project it from the breakout level.

**What is a false triangle breakout? **

There is always the risk of false breakouts when trading the triangle pattern. A false triangle breakout occurs when the price breaks out of the pattern and the subsequent price bars move back into the triangle, faking out traders who traded the breakout. It is a common occurrence in the market. Some traders consider it a sign of smart money manipulating the market to bring in more market orders to fill their positions.

**What are symmetrical, ascending, and descending triangles?**

There are three types of the triangle pattern:

**Ascending triangle**: In this type, the price swing highs are at the same level, giving it a horizontal upper boundary (resistance level), while the swing lows are rising, giving it an ascending lower boundary (support level).**Descending triangle**: This type has a horizontal lower boundary (support level) and a descending upper boundary (resistance level). That means, the swing lows are around the same level while the swing highs are descending.**Symmetrical triangle**: In this type, the upper boundary (formed by the swing highs) is descending, while the lower boundary (formed by the swing lows) is ascending.

## Breakout triangle trading strategy (backtest and example)

A backtest of a breakout triangle trading strategy is coming soon.