What is Bullish Symmetrical pattern?
A bullish symmetrical pattern is a continuation pattern. The pattern forms during an upward trend, when the resistance level and support level converge at a single point knows as apex.
Traders use this pattern in technical analysis of stock market patterns. The pattern is used to identify the continuation of the bullish trend, which is used to earn profit by traders.
Difference Between Symmetrical and Pennant Patterns
The Bullish symmetrical pattern has similar features as Bullish pennant pattern. Many traders get confused between both patterns. To differentiate both patterns there is one point to remember, Symmetrical pattern forms in longer time frame, it could be up to 1 week to 1 year and Pennant pattern forms in the time frame of 1 week to 3 weeks.
Usually, a pennant pattern formed took more than 4 weeks, will be considered as Symmetrical pattern.
How to Identify Bullish Symmetrical Pattern?
Bullish Symmetrical pattern occurrence is relatively good. It looks similar to the bullish pennant pattern, but on a longer time frame. It requires constant study of pattern to able to identify the pattern in technical analysis. Here are few points to remember to identify an effective pattern for a good trade.
- The Pattern forms during an upward trend, if it forms in downward trend then it will be called the bearish symmetrical pattern.
- The price action moves between the converging lines towards the apex point. Then the price breaks the resistance level and continues the trends. It is called the breakout point.
How to do trading with bullish symmetrical pattern?
When to take Entry?
Identifying a good trade requires a lot of practice and patience. A trader can make a good trade using bullish symmetrical pattern, if it indicates all the green signals to enter into a position.
Many traders lose money because of false breakout or entering into a position before the breakout. To correctly analyze the pattern, these are the reliable steps, to increase the chance of finding good trade and maximize your profit.
- Breakout: Wait for the breakout at the resistance level near the apex point. During the breakout the volume should be high compare to the converging points.
- Second Candle: When the price action breaks the resistance level, a candle will form on the resistance level. Eventually, the second candle will form, and the closing of the second candle should be higher than the breakout candle.
- The closing of the second candle will be the entry point. You can enter into a buy position.
Where to add Stoploss?
Stoploss is very important in trading. It ensures that you won’t lose all the money which you have invested in a trade. It is a tool to limit your risk, without stoploss your chances of losing your money increases.
For stoploss you can either place fixed stoploss or trailing stoploss.
The previous low which touched the support level will be your stoploss.
The stoploss will be same as the fixed stoploss. Only, you can increase the points over time. This will help you Maximize your profit and prevent you to lose all your profits.
For example, you enter into a buy position at 110 points and added your stoploss at 100 points. Let’s assume, you put the target at 140 but the price reaches 150, So increase your stoploss by 10 points. This way when the price reaches 200, your stoploss will be at 160. So, this will help you to maximize your profit and prevent you to lose your money as it were in stoploss 100.
Where to put Target?
You can use strategy of risk to reward ratio i.e., 1:2 or 1:3. Another strategy is to use the point difference from the resistance level and support level, from the first high created between converging Trend Line.