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Considered to be the heralds of profit opportunities, triangles can take anywhere from several weeks to several months to complete. They appear regularly on daily charts and frequently are the corrections in a large-scale trend. An ascending triangle gives a bullish outlook to the market, while a descending triangle is considered bearish.

A triangular formation consists of a horizontal baseline and a sloped line. In a descending triangle, for instance, a downward slanting line is drawn through two or more successively lower peaks. These peaks bottom out at approximately the same approximate price so that the horizontal line can be drawn through the bottom of two or more valleys (Figure 4). The line drawn along the price peaks represents a supply line. As the market advances the sellers enter the market at consecutively lower price levels. This supply entering the market can indicate the aggressiveness of the sellers relative to the buyers. While the market will hold up along the demand line established as the horizontal base of the triangle at some point, if the bears are correct then this area of demand will be overcome by the sellers. A descending triangle is simply an inverted ascending triangle.

The curious thing about triangles is that the price should never reach the apex of the formation, or the point, where the slope intersects the horizontal baseline.

The curious thing about triangles is that the price should never reach the apex of the formation, or the point, where the slope intersects the horizontal baseline. If the price simply continues along the horizontal base and out the apex, it is not a triangle. This continued sideways price movement is an indication that the market is consolidating the recent trend and is not reversing. In a triangle, the price should break through the horizontal base before reaching the apex, usually with a sharp increase in volume. To determine how far prices can be expected to travel in the breakout direction, the analyst draws a line parallel to the triangular slope equidistant to the horizontal base but on the opposite side. The price should reach this parallel slope.