Symmetrical triangle breakouts

Symmetrical Triangles can be characterized as areas of indecision. Typically, the forces of supply and demand at that moment are considered nearly equal. Each new lower top and higher bottom becomes more shallow than the last, taking on the shape of a sideways triangle. Eventually, this indecision is resolved and prices usually breakout of this formation to the upside or downside (often on heavy volume). In our example below, we demonstrate a short symmetrical triangle breakout strategy.

ADAPTED OPTION STRATEGY: BEAR PUT SPREAD

As the downside potential is limited by the 1.0565 target, a bear put spread allows you to lower the cost of the strategy (in comparison to a straight long call) by selling a put out of the money. As a result, the strategy consists of the simultaneous purchase of a put with a strike at 1.0600 and selling a put with a Strike at 1.0550.

Bear Put Spread: Leg 1

Trading Symbol 6E H7
Option Type PUT
Option Strategy LONG
Strike 1.060
Expiration MAR 17

Bear Put Spread: Leg 2

Trading Symbol 6E H7
Option Type PUT
Option Strategy SHORT
Strike 1.055
Expiration DEC 17

ADAPTIVE FUTURES STRATEGY

Trading Symbol 6E H7
Strategy SHORT
Entry Point 1.0614
Target 1.0565
Stop Loss 1.0635
Contract Expiry DEC 17

FINDING OPPORTUNITIES USING MOVING AVERAGE SUP- PORT LEVELS: GC Z7 AUG 17

ACTUAL OUTCOME

POTENTIAL GAIN PER CONTRACT

A target of 1.0565 is calculated by the measured move, which is projected from the top of triangle pattern.

POTENTIAL DOWNSIDE PER CONTRACT

Once prices break above 1.0635, the position should be closed with limited loss.

Symmetrical triangle breakouts Happening Now

Nasdaq: NQ

South Africa Rands:6Z


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