The so-called triangle consolidation refers to the rapid change of stock price after a period of time, that is, it moves up and down in a narrow range in a certain area without moving forward, and then continues the previous trend when the time is ripe.
Triangular arrangement can be roughly divided into convergent triangles and divergent triangles.
The directions of the two lines can be divided into symmetrical triangle, rising triangle and falling triangle, the diffusion triangle can be classified as the fourth kind of triangle, and the convergence triangle and the diffusion triangle can form a diamond (bear market form).
1, symmetrical triangle
Most of symmetrical triangle is in the process of a megatrend, which shows that the original trend is in the rest stage for the time being, and then it will continue to move in the direction of the original trend. It can be seen that after seeing symmetrical triangle, the biggest trend of the stock price in the future is to move along the original trend.
The above figure 1 is a simplified symmetrical triangle, and the original trend is upward, so the triangle breaks through upward after completion. As can be seen from the figure, there are two straight lines converging in symmetrical triangle, and the upper one inclines downward to exert pressure. The downward slope plays a supporting role.
The intersection of two straight lines is called "vertex". Just as the confirmation of the trend line needs the verification of the third point, symmetrical triangle should generally have six turning points (A, B, C, D, E and F in the figure). In this way, the support pressure of the upper and lower straight lines can be verified.
Symmetrical triangle is just a state of rest on the way to the original trend movement, and it won't last long. If it lasts too long, the ability to maintain the original trend will decline. Generally speaking, it should be as early as possible to break through the encirclement of up and down straight lines and continue the established direction of the original trend. The closer to the apex of the triangle, the less obvious the various functions of the triangle, and the less guiding significance it has for our investment. Friends who can't see the recent market can directly search for the subscription number trend goddess in the circle of friends, a trusted financial expert!
According to experience, the breakthrough position should generally be somewhere between 1/2 ~ 3/4 of the transverse width of the triangle. The transverse width of a triangle refers to the height of the vertex of the triangle to the bottom. But there is a big premise that the stock price must break through this triangle. As mentioned above, if the stock price does not break through the triangle at a predetermined position, then this symmetrical triangle shape may be transformed into other shapes.
In addition, in fact, symmetrical triangle's breakthrough is true or false, so we should make a judgment. It should be noted here that the trading volume of symmetrical triangle is decreasing due to smaller and smaller stock price fluctuations, and the upward breakthrough needs the cooperation of large turnover, while the downward breakthrough is not necessarily. Without the cooperation of volume, it is difficult to judge whether the breakthrough is true or false.
What will happen to the stock price after symmetrical triangle's breakthrough?
We can calculate, there are two calculation methods:
Method 1: As shown in the above figure, the height of the straight line with arrow from point C is the height that the stock price should reach at least in the future. The straight line length of the arrow is equal to the length of the AB connecting line. The length of line AB is called the height of symmetrical triangle.
From the breakthrough point of view, the stock price should at least move to a distance equal to the height of the form.
Method 2: As shown in Figure 2, make a parallel line parallel to the lower line through Point A, that is, the oblique dotted line in the figure, which is the position that the stock price should reach at least in the future.
It can be proved geometrically that the two prices obtained by these two methods are not equal in most cases. The former gives a fixed number, while the latter gives a constantly changing number. The later you reach the dotted line, the higher the price. This dotted line is actually a trajectory line.
The first method is simple and easy to operate and use. The second method is more from the track line.
In addition, although they are generally arranged in symmetrical triangle, sometimes there may be tops and bottoms, which will lead to a reversal of the general trend. This is a problem that should be paid attention to in the practical application of triangular form.
2. Rising triangle
The rising triangle is the deformation of symmetrical triangle, and the lower support lines of the two kinds of triangles all develop upwards, but the upper resistance line of the rising triangle is not inclined downwards, but a horizontal straight line.
The upper straight line plays the role of pressure, and the lower straight line plays the role of support. In symmetrical triangle, the pressure and support are gradually strengthened. It's getting lower and higher. You can't tell who is strong and who is weak. In the rising triangle, it is different. The pressure is horizontal, always the same, unchanged, and the support is getting higher and higher.
Thus, compared with symmetrical triangle, the rising triangle has a stronger sense of rising and is more active in many ways. Usually, the upward breakthrough of triangle is used as the sign of the termination of this continuous process. Friends who can't see the recent market can directly search for the subscription number trend goddess in the circle of friends, a trusted financial expert!
If the original trend of the stock price is upward, then the breakthrough after encountering the rising triangle is almost certain. On the one hand, we should keep the original trend, on the other hand, the form itself has an upward desire. These two factors make it very unlikely that the stock price will go in the opposite direction.
If the original trend is downward, then it is difficult to judge the trend of the stock price before and after the emergence of the rising triangle. If one side wants to continue to decline and maintain the original trend, and the other side wants to rise, there will inevitably be disputes between the two sides. If it is at the end of the downward trend, there is an upward triangle or bullish. In this way, the rising triangle becomes the bottom of the inverted form.
Similarly, when the rising triangle breaks through the top resistance line, it must have a large intersection point, otherwise it will be regarded as a false breakthrough. The measurement method of increment after breakthrough is the same as that of symmetrical triangle.
3. Descending triangle
Contrary to the rising triangle, it is a bearish pattern. Its basic content is similar to the rising triangle, but in the opposite direction.
The volume of the descending triangle is very low, so it doesn't need a lot of volume when it breaks through. In addition, if the original trend of the stock price is upward, it is difficult to judge the trend after encountering a downward triangle. But at the end of the upward trend, a downward triangle appears, which can be regarded as the top of the inverted form.
Case: