Trading Futures……… Growing Profits

A Futures Trader’s Look at Triangles

Triangle Formations

Triangle formations have the appearance of a sound wave; the highs and lows for each period become narrower. Drawing a line across the tops of the highs and across the bottoms of the lows will create a triangle. Generally, the triangle formations occur in the middle of a trend and can be used as a method of measuring the length of the next move.

The measurement from the last high to the tip of the triangle will usually tell you the length of the next move down and vice-versa in an uptrend. The point at which the market trades outside the triangle is called the breakout. Trades should be made in the direction of this breakout.

Figure 1 Symmetrical Triangle With a Breakout to the Downside



Figure 2 Ascending Triangle

A symmetrical or equilateral triangle (all angles of the triangle are approximately equal), shown in Figure 1, does not indicate the direction likely to be taken by the emerging trend. However, an ascending triangle is typically bullish, and a descending triangle is typically bearish.

The ascending triangle conveys a simple example of increasing demand for a certain commodity with plenty of offering. If the demand persists, the offering will be absorbed by new buyers or by owners adding to their existing positions. The old shorts will add to their positions and as the market breaks out, the shorts will have to dispose of part or all of their holdings. A descending triangle, of course, does the opposite. (Figure 2)

Subscribe to our Trading Service Free for 30 Days

Here’s what real investors like YOU have to say about Visible Trends-

Jim: I finished reading your futures trading newsletter last night. Thank you for sending it. It is one of the best and most comprehensive pieces I have read on the economy, and we read several newspapers every day, including the Wall Street Journal. I marked my calendar for March 13, looking forward to your next newsletter. Cheers... Al Bradshaw

Tag Cloud


By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that JL Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. This material has been prepared by a sales or trading employee or agent of JL Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by a Research Department. Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation.