TRIANGLES

For their directional trading, binary option traders need to know when a trend is likely to continue in the same direction. Triangles are part of a group of chart patterns known as continuation patterns, which are thus called because they tend to indicate that the dominant trend is going to continue. Ascending triangles tend to occur during uptrends and are bullish signals that foretell the continuation of the uptrend. Descending triangles tend to occur during downtrends and are bearish signals that foretell the continuation of the downtrend.

Ascending triangles form when an essentially horizontal price pattern has a flat top and rising bottom. That is, the peaks of the price waves occur at the same price level every time, whereas the troughs occur at progressively higher price levels. Traders interpret this to mean that buyers are ‘closing in’ on the sellers, who are trying to hold price at the resistance level signified by the top of the triangle. Once the buyers have neared that resistance level, the pressure they apply often overcomes it, resulting in a breakout to the upside and the continuation of an uptrend. Binary option traders who see this breakout occur should put their money on above/below options with returns that reward a price increase.

Descending triangles are the mirror images of ascending triangles. A descending triangle is a horizontal price pattern wherein the price waves have subsequent troughs at identical price levels–representing a support line–and progressively lower peaks. Traders believe that this pattern indicates that sellers are ‘closing in’ on buyers, and that price will break out to the downside just before the triangle fully closes. Binary option traders who see the downside breakout of a descending triangle should count on the resumption of a downtrend and place their money into above/below options favoring the downside.