Most of the classic triangle patterns like Symmetrical Triangle, Pennant represent Contraction, where the market compresses before exploding. On the contrary, Expanding Triangle represents Expansion. This is the most dangerous and difficult pattern to trade, where both Bulls and Bears are acting crazy and irrationally.
๐ธExpanding Triangle is shaped like two Trendlines (Resistance and Support) that do not converge but flare out to the right, like a megaphone.
Price constantly makes Higher Highs. Simultaneously makes Lower Lows.
Volume often increases and becomes chaotic during formation, instead of drying up like standard accumulation patterns.
๐ธ This is when the market gets out of control. Bulls greedily push price above old highs, but immediately Bears fearfully smash price below old lows.
Market no consensus on value. Emotions swing from Extreme Euphoria to Extreme Fear within a few candles.
Because price keeps breaking highs then breaking lows, it sweeps Stop Losses of BOTH sides Longs and Shorts. Breakout or Swing traders are all swept in this zone.
๐ธ Apply 3 rules to survive in market turmoil
Rule number 1 is ABSOLUTELY DO NOT TRADE inside the triangle. This is the Death Zone. You will get your SL wiped out constantly.
Wait for True Breakout. Only enter when price decisively breaks the upper or lower edge with Confirmation Volume and a clear candle close. This pattern often appears at Tops (Broadening Top) and signals a major bearish reversal.
If you must trade, reduce size to minimum because the risk range is massive.
๐น When you see the market start screaming abnormal expansion, step aside. In a riot, the bystander is the safest person.
Are you sharp enough to recognize when the market is losing its mind and retreat, or do you dive in trying to control the chaos?
News is for reference, not investment advice. Please read carefully before making a decision.