Triangles and wedges are patterns where price oscillates in a shrinking space until exiting one side. These are consolidation patterns — the market "catches its breath" between directional moves and compresses before exploding. Learning to recognize them, anticipate their breakout, and avoid their traps is a core skill for any swing trader.
The three classic triangles
1. The symmetric triangle
The most neutral of the three. Two converging trendlines — a descending upper trendline (lower highs) and an ascending lower trendline (higher lows). Price oscillates in a cone that shrinks.
Interpretation: indecision. Neither buyers nor sellers dominate. It's a continuation pattern in most cases — price usually breaks out in the direction of the prior trend, but it's not guaranteed. Statistically, roughly 55-60% chance of continuation, 40-45% of reversal.
Lesson: wait for the breakout. Don't bet on direction before it happens.
2. The ascending triangle
Two lines again, but this time the upper line is horizontal (flat resistance) and the lower line ascending (support rising). Price makes progressively higher lows against resistance that refuses to give.
Interpretation: bullish. Buyers are buying higher each time, pressure accumulates under the resistance. The breakout is statistically upward in 65-70% of cases.
It's a classic continuation pattern in an uptrend: the market "charges" against a ceiling before breaking it.
3. The descending triangle
The inverse. Upper line descending (lower highs), lower line horizontal (flat support). Sellers are selling lower each time against support that holds.
Interpretation: bearish. Same logic inverted — the breakout is statistically downward in 65-70% of cases. Classic bearish continuation pattern.
Wedges
Wedges resemble triangles but have a crucial difference: both trendlines go in the same direction. Two cases:
The rising wedge
Both trendlines rise, but the upper rises slower than the lower → trendlines converge upward.
Interpretation: bearish. This is counter-intuitive — highs and lows are rising, it looks like an uptrend. But rising wedge convergence signals exhaustion: each new high is closer to the previous one, buyers are pushing but less forcefully each time.
Rising wedge in a bullish trend often announces a bearish reversal. Rising wedge during a rebound in a bearish trend often announces resumption of the downtrend.
The falling wedge
The inverse: both trendlines fall, the upper faster than the lower → convergence downward.
Interpretation: bullish. Sellers are still pushing, but with less amplitude. The breakout is usually upward.
Falling wedge is one of the best bullish signals when it appears at the end of prolonged downtrend — it signals the gentle capitulation of sellers.
How to trade them
Rule #1: don't trade the pattern before the breakout
The biggest mistake with triangles and wedges is "betting" on direction before the breakout. You see an ascending triangle, you enter anticipating — and the breakout goes down, false breakout, stop hunted. Wait for the actual breakout.
Rule #2: breakout with volume
Like all patterns, the breakout must be accompanied by volume significantly above average. A breakout without volume is a red flag.
Rule #3: wait for the candle close
Not the wick. The close. Ideally on a timeframe equal to or higher than the pattern's TF. A 1h breakout of a 4h triangle ideally needs a 4h close outside the triangle to be "truly" validated.
Rule #4: the retest is often the best entry
After a valid breakout, price often retests the broken trendline (now support or resistance). This retest gives:
- A precise entry at the trendline level;
- A tight stop just on the other side;
- Often excellent risk/reward.
If you miss the retest (not all breakouts have one), you can enter on the initial breakout — but with a wider stop.
Rule #5: projected target
The "theoretical" target for a triangle is obtained by measuring the base height (largest width) and projecting it from the breakout point. For a wedge, same logic.
This target is reached roughly 60% of the time. It's a useful heuristic for setting an initial target.
Pitfalls
Pitfall #1: false formations. The market moves, you're tempted to see a triangle in every zigzag. A real triangle has at least 4 touches on its two trendlines (2 minimum on each side) and spans several candles clearly. "Micro-triangles" over 6 candles are noise.
Pitfall #2: too-late breakouts. Most triangles break in the last two-thirds of their formation. A triangle that "hasn't broken" after 80% of its depth tends to lose reliability. If price reaches the apex of the cone without clear breakout, the signal weakens.
Pitfall #3: confusing triangle and wedge. The difference lies in trendline direction: if both go the same way (both up or both down), it's a wedge. Otherwise it's a triangle. This difference changes interpretation — wedges are often counter-intuitive (rising wedge bearish, falling wedge bullish).
Pitfall #4: ignoring volume during formation. A "good" triangle sees its volume decrease during formation (sign both sides are exhausting), then explode at breakout. If volume stays high throughout the triangle, the pattern is less reliable.
In DYOR
DYOR automatically detects trendlines and, by extension, can spot triangle and wedge formations. On the detailed view, converging trendlines are often visible to the eye even without automatic annotation. Some useful Trendscanner filters:
- Coins with a resistance trendline close to breaking (for trading ascending triangles);
- Coins in consolidation across multiple TFs (volumes dropping, ATR falling) — often compression patterns forming.
To go further
- Trendlines — the building blocks of these patterns;
- Flags and pennants — other consolidation patterns, shorter-duration;
- Breakout strategy — how to systematically trade pattern breakouts.