Triangle – 50% Rule

A three-column triangle represents a neutral price convergence pattern.

IA sequence of two inside columns forms a three-column triangle. In some cases, the first column in inside column is too short in comparison with the earlier column. Although it fits within the definition of an inside column, it does not necessarily imply a triangle in that case. Hence, there is a rule introduced that the length of the second column should be at least 50% of the length of the first column of the triangle pattern.

1 – First swing move

2 – Inside column and at least 50% of the first swing move

This rule will ensure that there is a pattern of price convergence in the triangle.

Prashant Shah has explained this rule in his book on P&F charts.

Click here to learn more about the pattern.

This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.