Global Currencies

Chapter 1

Forex Basics

Chapter 2

Fundamental Factors

Chapter 3

Technical Tools

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More Continuation Patterns

Triangle patterns are usually characteristic of a trend consolidation followed by an accelerated break out of the pattern in the direction of the continuing trend. Triangles form in three basic categories: symmetrical, ascending and descending. A variant of the triangle pattern is the wedge.

Symmetrical Triangle

A symmetrical triangle is indicative of a period of consolidation during an uptrend or a downtrend. The symmetrical triangle has a line of support that slopes upwards and a line of resistance that slopes downward. The triangle pattern yields to a breakout in the direction that corresponds with the trend beforehand, though not always.

Ascending Triangle

An ascending triangle is indicative of a period of consolidation during an uptrend. It is formed when price action moves between a line of resistance that is relatively flat or horizontal and a line of support that is sloping upwards.

As the two lines converge the chance of a break out increases. When price moves strongly above the line of resistance the pattern ends.

On the right is a daily chart showing an uptrend that consolidates for almost a month in an ascending triangle pattern.

Descending Triangle

A descending triangle is indicative of a period of consolidation during a down trend. It is formed when price action moves between a line of resistance that is sloping downwards and a line of support that is relatively flat or horizontal. As the two lines converge the chance of a break out increases. When price moves strongly below the line of support the pattern ends and the downtrend continues. A real life example is shown to the right.

Wedges

The wedge pattern shares most of its characteristics with the symmetrical triangle and the flag. The wedge forms much like the triangle and signifies a sharp expected breakout in the direction of the prevailing trend. Much like the flag, however, the wedge itself forms at an inclination opposite to the direction of the trend before breaking out in the direction of the prevailing trend.

Risk Warning

Before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose.

There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair.

More over, the leveraged nature of forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. To manage exposure, employ risk-reducing strategies such as 'stop-loss' or 'limit' orders.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Forex.com/UK acts as the clearing agent and counterparty to customers introduced by "Global Currencies" for an IB margined forex transactions. FOREX.com is a trading name of GAIN Capital - FOREX.com UK Limited and is authorised and regulated by the Financial Services Authority. FSA No. 190864.