Bilateral Chart Patterns: Triangle, Wedge & Pennant Trading Guide
•By Siti Afizah Rincing
Loading...
There are 3 types of chart patterns:
According to the dictionary, bilateral means involving two sides.
It can be a bit confusing.
Why?
Because we are not yet certain which direction the trend is heading.
It can move in either direction — either upwards or downwards.
It may seem like there is no clear function since we do not know where it is going, but that is exactly why we should be more cautious.
To get confirmation, you need to wait for a breakout.
This pattern forms a triangle pointing upwards.
The upper part of the triangle is flat (horizontal), which acts as resistance.
The lower part of the triangle is constantly rising, which acts as support.
You need to wait for a breakout first before you can determine which direction the price is heading. It could go upwards, but it could also go downwards.
Usually, the trend continues upwards, but it can also reverse downwards.
This pattern forms a triangle pointing downwards.
The lower part of the triangle is flat (horizontal), which acts as support.
The upper part of the triangle is constantly declining, which acts as resistance.
You need to wait for a breakout first before you can determine which direction the price is heading. It could go upwards, but it could also go downwards.
Usually, the trend continues downwards, but it can also reverse upwards.
A symmetrical triangle is often viewed as a continuation pattern, signalling a period of consolidation within a particular trend before it resumes.
It is formed by a support line and a descending resistance line.
Typically, the price of the instrument will bounce between the trendlines.
The price moves closer and closer to the apex (that is the name for the point where both lines meet), before breaking out in the direction of the previous trend.
It acts as a reversal if it appears at cycle extremes or at significant resistance or support levels.
It acts as a continuation if it appears at cycle midpoints.
There are two types of triangles: ascending and descending.
For an ascending triangle, the upper part is flat (horizontal) while the lower part is constantly rising.
This is different from a descending triangle, where the lower part is flat (horizontal) and the upper part is constantly declining.
What about the wedge?
In Malay, a wedge is called "baji".
A wedge (baji) is an object with one pointed end and one thick edge.
A pennant is a long, narrow triangular flag.
Refer to the image below.
We hope this guide has been helpful!
A bilateral chart pattern is a chart formation that can move in either direction — either up or down. It differs from reversal and continuation patterns because it does not give a clear directional signal until a breakout occurs.
The most common examples are the symmetrical triangle, ascending triangle, descending triangle, wedge, and pennant. Each has its own distinct shape and characteristics that investors need to understand.
You need to watch for when the price breaks through the upper line (resistance) or the lower line (support) of a pattern with high trading volume. A valid breakout is usually accompanied by a significant increase in volume.
Yes, bilateral chart patterns are suitable for beginners to learn as they help in understanding stock price movements. However, new investors are advised to combine chart pattern analysis with fundamental analysis before making investment decisions.
Interested in starting your share investing journey? Open a CDS account with Mahersaham today and take the first step into the world of investing.
Want to learn the basics of shares from scratch? Download the free Mahersaham ebook now and understand investment concepts with ease.
Further reading: