When a breakthrough occurs from a triangle, trading opportunities abound. To predict the breakout’s direction is unnecessary. Once a breakout happens, traders should move in that direction. Trading positions are already taken when the pattern appears and should be held while the triangle develops.
These positions would need to be closed if a breakout occurred opposite to the positions traders have previously taken. The potential of a breakout in the other direction is the reason for this. If the breakthrough signifies a strong trend reversal, the price movement against them might be tremendous.
We have a breakout when price movement breaks through one of the triangle’s boundaries. For example, if price action breaks through a resistance or support line, traders should open long or short positions depending on the direction of the price movement.
To protect themself from a false breakout, they should wait for a candle to close outside the pattern itself; however, if a candle closes considerably outside of the pattern, the potential for profit decreases because the position has been taken too late.
Nearly all patterns have a protective stop–stop loss at some point. A trader should enter a short position with a stop loss exactly above the level of resistance if price movement breaks through the level of support. It is recommended that traders take a long position with a stop loss just above the level of support when price movement breaks through the level of resistance.
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