Contracting triangles are one of the most common consolidation patterns that are to be met on the currency markets and if a trader comes to understand such a pattern it is surely going to have an easier life when trading.
These patterns are extremely tricky as they can be both continuation patterns, as well as reversal patterns, and they should be treated differently depending on the early identification stage because, for example, in the case of a contracting triangle that is a continuation pattern there is a measured move and a minimum target given by the thrust of the triangle, and in the case of a contracting triangle that is a reversal patterns once a break unfolds, usually means previous highs/lows of the prior trend are going to be taken/challenge.
Contracting triangles are patterns to be found when using the Elliott Waves Theory on counting waves as they are coming in the form of a 4th wave or b wave type, when they are continuation patterns and in the form of a part of a complex correction, like double or triple combination, and in this case they are reversal patterns and imply previous highs/lows are going to be challenged.
This chapter will have one sub-chapter in which I will try to show you how to early identify such a pattern and this part will have four different recordings, showing you continuation and reversal patterns in the form of the contracting triangles, what are the early signs, retracement between the legs of the triangle, etc.
The second sub-chapter will deal with how to actually trade such a pattern, what to look for, the concept of the 50% line, the thrust of the triangle, the measured move if it is a continuation pattern, what to expect if it is a reversal pattern, introducing the elongated flat concept, etc. All presented in a series of six different recordings, with clear examples on different pairs and time frames.