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Mullooly Asset Management

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Brendan Mullooly on the Triangle Formation

The Triangle Formation

April 6, 2015 by Brendan Mullooly, CFP®

In this video, I explain the triangle formation. This pattern can be both bullish and bearish, which makes it particularly interesting. In point and figure charting, the triangle formation’s looks are true to its name. To put it plainly, you’ll be able to see a clear triangular shape on the security’s chart.

A triangle formation is the result of a hard fought battle between supply and demand. Decreasing demand is displayed through lower tops (columns of X’s failing to surpass those before them). Decreasing supply is displayed through rising bottoms (columns of O’s failing to surpass those before them). When this pattern continues for five columns or more, we have a triangle formation.

What makes a triangle formation bullish or bearish?

A triangle formation is considered to be bullish when it resolves itself with a double top buy signal. A triangle formation is considered to be bearish when it resolves itself with a double bottom sell signal.

Our friends at Dorsey Wright and Associates have taught us that breakouts (in either direction) from the triangle formation tend to be “quick, explosive moves”. That’s why this is a point and figure pattern we like to keep an eye open for.

Learn more about the triangle formation by watching the video!

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Filed Under: Videos, Chart School, Technical Analysis Tagged With: point and figure

About Brendan Mullooly, CFP®

Brendan Mullooly is a CERTIFIED FINANCIAL PLANNER™professional with Mullooly Asset Management, Inc.

1971 State Route 34, Suite 102
Wall Township, NJ 07719

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The information on this website and blog do not involve the rendering of personalized investment advice. A professional advisor should be consulted before implementing any of the options presented. None of the content contained in this website should be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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