Limiting and Non limiting Triangles
Now that we have covered most of the common forming triangles in my previous posts, the next question is how do we predict Market movement ( or set the target) once the Triangle is complete? To answer this question we need to carefully observe the triangle and try to find out if the Triangle is completing as " Limiting triangle" or "Non limiting triangle". Yes most triangle can further be categorized as Limiting or Non limiting. Thrust or move out of a triangle ( or target) is totally dependent on this.
To identify if the triangle in question is Limiting or non limiting one should look at the 'Apex Point' ( Apex Point is where both A-C and B-D line of the triangle meets). If the apex point is very near to E leg (meaning there is congestion near apex point) then its a non limiting triangle and if there is no congestion and apex point is far from end point ( i.e. E leg) then triangle is Limiting triangle
To make things more clear, lets have a look at below example
Non Limiting Triangle:
Now that we have covered most of the common forming triangles in my previous posts, the next question is how do we predict Market movement ( or set the target) once the Triangle is complete? To answer this question we need to carefully observe the triangle and try to find out if the Triangle is completing as " Limiting triangle" or "Non limiting triangle". Yes most triangle can further be categorized as Limiting or Non limiting. Thrust or move out of a triangle ( or target) is totally dependent on this.
To identify if the triangle in question is Limiting or non limiting one should look at the 'Apex Point' ( Apex Point is where both A-C and B-D line of the triangle meets). If the apex point is very near to E leg (meaning there is congestion near apex point) then its a non limiting triangle and if there is no congestion and apex point is far from end point ( i.e. E leg) then triangle is Limiting triangle
To make things more clear, lets have a look at below example
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| Limiting and Non limiting Triangles |
- Like mentioned above, if the Apex point is far away ( general rule is total distance between E leg and Apex point should not be less than 20% of entire triangle).
- Once the E leg is over you may take a trading position
- Trading target will be 75% to 125% of largest leg of the triangle
Non Limiting Triangle:
- Like mentioned above, in such triangles the apex point is very near to end point of triangle ( too much congestion near Apex point)
- Once the E leg is over, price action breaks in opposite direction
- But as the name suggests non limiting triangle has no specific range or target area and the thrust area out of it is 'non limited'
- Non Limiting triangles generally gives false break out and trend resumes in main direction pretty soon. In other words the movement which follows non limiting triangle may not last for long
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