# Chapter 14, Part VII. Triangles. Page 10

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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1. ### Sive Morten Special Consultant to the FPA

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This type of triangle is mostly reversal rather than continuation, even more, the fact of continuation treated as failure of the pattern. The major difference with these patterns compared to common triangles is that Broadening Top/Bottom starts from apex and then increase swings as upward as downward. That’s why it is called like that.

In fact – this is a single pattern and it looks similar as on tops as on bottoms. It counts that appearing of such pattern could lead to reverse of the market trend. This pattern as a rule has no slope, so it horizontal. But it’s enough blah-blah-blah, let’s take a look at the picture. I couldn’t find perfect pattern to show you on Forex, that’s why I use for explanation example on Dow Jones equity index. But later I’ll show you this pattern on GBP/USD

Chart#10 | Dow Jones weekly – broadening top

As you can see pattern starts from apex, and then market creates higher highs and lower lows.

- Theoretically the market should show 5 swings.

- The 6th swing should be retracement of the 5th one and used for entering the market. Usually it 0.618-1.0 of 5th swing;

- The time between swings should be equal – this is perfect, but it’s rare to happen;

- The most applicable Fib ratios here are – 1.272; 1.618 for tops and bottoms. It means that latter top/bottom should be 1.272 or 1.618 extension of previous ones.

- Also it’s possible that 5th swing will be 2.0 extension of the 4th one, but not greater. If it will be greater, than possibly market will continue it’s tendency.

- 6th swing usually just a Fib retracement from 5th swing and most applicable ratios are 0.618; 0.786 and 0.88. Sometimes it could be 1.0 but this is not very good.

- The high or low (depending on where this pattern forms) of 5th swing is a failure point. If market will break it, then, possibly this pattern should be treated as failed. Hence, stop loss should be placed somewhere beyond the 5th swing.

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Lasted edited by : Apr 1, 2016