Symmetrical triangle or Ascending or Descending Triangles our mainly called continuation pattern. Sometimes they act as reversal pattern.

Symmetrical Triangles are formed when there is great uncertainty about direction.  Neither Bulls nor Bears can make up their mind about where they want to go. This leads to decreased volatility and prices narrow to the center of the previous trading range. They can break out in either direction.

nflx-symm-t

Symmetrical Triangle Pattern

Descending Triangle – The recent lows of the new trend form a temporary support line, and prices may bounce off that level while short-term traders go long for small profits. This action forms a descending triangle. As more traders are convinced that prices are still heading lower, rallies off the support level are sold sooner, causing a narrower pattern and descending triangle is complete. In most cases prices will break down to the downside making it a continuation pattern but they can also break to the upside too and thus making it a reversal pattern.

Descending Triangle Pattern

Descending Triangle Pattern

 

Ascending Triangle – The recent highs of the new trend form a temporary resistance line, and prices start to reject these price levels and move lower. More traders get in the trade in the anticipation of prices moving even higher. Prices fail to break the resistance line and head lower again. As more traders keep getting in the trade at higher prices, believing that stock will move higher, volatility reduces and it forms a narrow pattern, ascending triangle is complete.

In my experience, just the shape of the triangle is not enough to confirm the direction of next movement but direction of breakout is. Which means, An ascending triangle can also breakout to the downside making it bearish and a descending triangle can breakout to the upside making it bullish.

Symmetrical Triangle with Price Targets

Ascending Triangle Pattern