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1996issue C041-5

A price-channel case study with a pending triangle signal and a planned stop-loss

A historical case study of a price channel that framed one lower-boundary purchase and one upper-boundary exit. A symmetrical triangle on the channel boundary was held until an upper pierce, and a stop-loss was planned before the first fill.

  • A price channel marked trend boundaries so a lower-boundary purchase and an upper-boundary exit could be treated as one cross of the channel.
  • A symmetrical triangle on the channel boundary was held as a pending signal. The trader waited for an upper-boundary pierce instead of calling the breakout direction in advance.
  • The stop-loss was planned 12 percent below a 9 1/8 purchase and offset from a whole-number price, because clustered stops can become market orders.
  • Channel boundaries were treated as oversold or overbought zones that prices do not linger on, so the teaching rule was to exit as price neared the far boundary.
Entries in this reading3 entries
Current trackTriangle pattern55 readingsPrice channel77 readingsStop-loss order144 readings

The price-channel hypothesis

A price channel is used to mark trend boundaries so a lower-boundary purchase and an upper-boundary exit can be framed as one cross of the channel.

A triangle on the channel boundary

A symmetrical triangle is defined by successively lower highs and higher lows that coil toward an apex. Volume typically diminishes as the apex approaches.

In well-formed symmetrical triangles, a breakout is described as more reliable when it occurs about half to three-quarters of the way to the apex. The same breakout is described as weaker if price travels closer to the apex first.

A triangle sitting on a price-channel boundary was treated as a possible reversal. The trader waited for an upper-boundary pierce rather than predicting breakout direction in advance.

A stop-loss before the first fill

A stop-loss was planned 12 percent below a 9 1/8 purchase. The order was offset from a whole-number price because clustered stops can become market orders.

Varco (VRC) daily price and statistically positioned trend channel, 1995

Varco climbed a rising three-line channel through 1995, coiled in a symmetrical triangle on the lower rail after the September peak near 11.8, then ran toward the upper rail into year-end. Daily prices and the three parallel rails were read from the published MetaStock chart of VRC; they are approximate to about a tenth of a dollar.
Varco climbed a rising three-line channel through 1995, coiled in a symmetrical triangle on the lower rail after the September peak near 11.8, then ran toward the upper rail into year-end. Daily prices and the three parallel rails were read from the published MetaStock chart of VRC; they are approximate to about a tenth of a dollar.Varco International (VRC) · daily · 1995-01-01T00:00:00.000Z to 1995-12-31T00:00:00.000Z

Bulkowski draws the midline as a least-squares fit to price and places the outer rails two standard deviations away. The small October–November coil sits on the lower rail. Values come from the raster, not from a printed table.

After entry, the far boundary is the exit

After entry, an advance was turned back at prior channel resistance just above the center channel line. Price later approached the upper channel boundary before the position was closed.

Channel boundaries are treated as oversold or overbought zones that prices do not linger on. The teaching rule is to exit when price nears the far boundary rather than wait for a higher print.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
6 of 33 in the Triangle pattern track
19961-4 pp.Next on Triangle patternExpanding triangle as a dual-label fourth-wave reversal worksheetAn expanding or broadening triangle is an uncommon widening coil of higher highs and lower lows, used as a long-horizon reversal hypothesis rather than an everyday contracting continuation pattern.
All readings on this track · 33 readings
  1. 1986Gold as a double zigzag before a contracting B-wave triangle
  2. 1990Scoring competing wave counts after a crash
  3. 1992Pre-trade checklist for trendline and triangle signals
  4. 1995Chart patterns as tactics, not strategy
  5. 1996Constructing Elliott wave counts with triangles and Fibonacci
  6. 1996A price-channel case study with a pending triangle signal and a planned stop-loss
  7. 1996Expanding triangle as a dual-label fourth-wave reversal worksheet
  8. 1997Rising wedge construction, breakout, and volume
  9. 1997Confirm structure and conditions before naming a Triangle pattern
  10. 1999Drawing the Triangle pattern before Breakout confirmation and the Stop-loss order
  11. 2000Four-phase market cycle triangle breakouts
  12. 2000Continuation triangles as a three-lock experiment
  13. 2001Folding rule: stacking three trendlines on an accelerating swing
  14. 2003A scored symmetrical triangle on a utility stock
  15. 2003Constructing wedges versus flat-boundary triangles
  16. 2004Testing triangle breakouts against volume filters
  17. 2004Mute triangles, histogram force, and trader optimization
  18. 2004Constructing falsifiable reversal and continuation patterns
  19. 2004Construct a corrective rising wedge before treating it as a short
  20. 2004A continuation triangle with Fibonacci targets and an apex stop
  21. 2005Pre-breakout filters for classic chart patterns
  22. 2005Reverse trendlines as a geometry lab for convergence and expanding triangles
  23. 2005Volume shapes versus triangle and double-pattern breakouts
  24. 2005A nested-pattern checklist on the 2005 euro
  25. 2005Volume test for a descending triangle breakout
  26. 2010Constructing triangle, broadening, and head and shoulders patterns
  27. 2011Treat a numeric pattern rank as a shortlist
  28. 2011Evaluating the head-and-shoulders as a falsifiable reversal
  29. 2013Auditing chart patterns by the first post-breakout swing
  30. 2014A three-gate entry for a triangle pullback
  31. 2014Golden triangle: a 50-day pause that still needs both gates
  32. 2014The triangle qualifier came after the rating pre-screen and the fifty-day bounce
  33. 2018Aligning daily, weekly, and monthly triangles with trendlines and Fibonacci retracements
By fieldTrend and channels181 readingsBy year199680 readings
All 55 readings tagged Triangle pattern
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