Bullish Expanding Triangle

What is bullish Expanding triangle and how to do trade with it?

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

Bullish expanding triangle

The pattern can be present at all time frames, but it is effective if formed in the Downward trend. With every bounce back the pattern expands further. In bullish 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 stock market, which makes the market volatile.

How to Identify the Bullish expanding triangle?

How to identify bullish 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 the price action breaks the resistance level, will be your breakout point, indicating that the price will move towards that direction

When to take entry in Bullish expanding triangle?

Bullish Entry Point

Bullish expanding triangle entry, stoploss and target

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

Where to Add stoploss and Target in Bullish 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 support level which was formed before by the price action.

Re-test Point

bullish expanding triangle entry, stoploss, and target at retest point

Eventually, when the price action breaks the resistance level and moves upward, the price will take bounce back after making a new high and get to the resistance level (which is now the support level for the price action. This phenomenon gives the traders a to maximize their profit, as historically, price bounces back from the support level. Giving traders an opportunity to take buy position in the market.
One can take buy position at the closing of the Re-Test candle.

Adding stoploss and target when price Re-Test.
Stoploss: You can add a trailing stoploss from opening of the breakout candle.
Target: Traders can maximize their profit by adding trailing stoploss.

Bearish Entry point

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

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