Technical Analysis: Simple Triangle Chart Pattern Trading in Silver
Chart pattern trading is very much popular in the commodities trading. Professional silver gold investors use important chart pattern to identify the possible reversal and trend continuation in the financial asset to take high probability trade.
Unlike currency pairs, the price movement of silver is the little bit different and tends to form important chart patterns frequently in the chart. Among many different chart patterns, the most profitable and common chart pattern traded in silver is triangle chart pattern,
Let us see an example trend continuation in silver:
Figure: Trading the triangle chart pattern in silver
Triangle chart pattern is generally formed after a long upward or downward movement of any financial asset. In general, it may take up to three months to complete the formation of triangle chart pattern. In the above figure, a symmetric triangle chart pattern is formed after a long upward movement in the silver trading. Most new traders will sell the silver since the market will form successive lower high.
On the contrary, those who are familiar with chart pattern will instantly identify the new formation of the triangle chart pattern and wait patiently for the breakout. The green shaded zone in the figure signifies a valid breakout of the triangle pattern followed by a strong bullish candle. The professional trader will enter long wait for proper risk management right after the bullish candle formation.
It’s very important to pay attention to major economic silver trading news release while trading the chart pattern. Most of the time during the formation of the triangle chart pattern there is new major news release in the silver. The long-awaited breakout generally occurs by the significant news release or economic activities in the financial world. Sometimes the price will break the triangle support or resistance level before the pattern is complete. In that case, traders can wait for the minor retracement to take entry in the direction of the breakout.