A symmetrical triangle is a chart pattern used in technical analysis that is characterized by two converging trend lines connecting a series of sequential peaks and troughs. The trend lines converge to form a triangle that slopes symmetrically, indicating that neither buyers nor sellers are in control. Here's a breakdown of the key points:
Characteristics of a Symmetrical Triangle:
1. **Converging Trend Lines**: The upper trend line is formed by connecting a series of lower highs, and the lower trend line is formed by connecting a series of higher lows. 2. **Symmetry**: Both trend lines converge towards each other, creating a shape that looks symmetrical. 3. **Volume**: Typically, the volume decreases as the pattern progresses and the price moves towards the apex of the triangle. 4. **Breakout**: A breakout typically occurs before the price reaches the apex of the triangle. This breakout can be in either direction – upwards or downwards – and is often accompanied by a significant increase in volume. 5. **Continuation or Reversal**: This pattern can signal either a continuation of the existing trend or a reversal, depending on the direction of the breakout.