Trading Breakouts & Chart Patterns
A breakout can be identified by looking a price ceilings or resistance and price floors or support. When price breaks, closes and holds for a period above resistance or below support a breakout has taken place. A breakout signifies a shift in the market where one side, bulls or bears, has lost the battle, and the side in favor of the breakout is about to take over.
The triangle pattern is a specific figure formed on the price chart, typically identified when the tops and the bottoms of the price action are moving toward each other like the sides of a triangle. When the upper and the lower level of a triangle interact, traders expect an eventual breakout from the triangle. As such, many breakout traders use triangle formations for identifying breakout entry points.