Bearish Expanding Triangle

What is bearish Expanding triangle and how to do trading with it?

Bearish Expanding triangle

A bearish expanding triangle is a bearish pattern. It is also known as the expansionary formation. Traders use this pattern to identify the reversal of the upward trend or continuation of the bull market. It is not easy to identify, and the chance of its occurrence is very low. It forms in very high volatile market.

The pattern can be present at all time frames, but it is effective if formed in the upward trend with every bounce back the pattern expands further. In bearish expanding triangle you will notice that the highs and lows are getting bigger from the apex point to the open mouth. This clearly indicates that there are equal buyers and sellers in the market, which makes the market volatile.

How to Identify the bearish expanding triangle?

  • Support level and resistance level which are drawn will have the apex point on left and the open mouth on the right
  • With every swing the Highs and lows are getting bigger, which means the market is volatile

When to take entry in Bearish expanding triangle?

Bearish Entry Point

Reversal of the Trend

When the price action breaks out through the support level that will be your first entry point. This indicates that the sellers dominated the market and made the price dropped even lower.

Where to Add stoploss and Target in Bearish expanding triangle?
Stoploss – Add your stoploss at the opening of the breakout candle.
Target – There is no specific target in this pattern, most traders enjoy the profit by applying trailing stoploss. The limitation for the target will be the last three resistance level which was formed before by the price action.

Bullish Entry point

Continuation of the Trend

As the market is volatile with similar entries of buyers and sellers, the buyers might have the upper hand which will lead the price action to break the resistance level and continue the current trend. So the question is where to enter the market? You can take a Buy position at the closing of the breakout candle

Where to add stoploss and Target in Bearish Expanding triangle with bullish breakout?
Stoploss – Add your stoploss at the closing of the breakout candle
Target – Target for the Bullish entry point will be similar as the bearish entry point. Using trailing stoploss and the limitation with the last three support level which was formed before the apex point by the price action.