Yard Charts Technical Analysis Software:
Top Right Triangle Pattern
Pattern Overview
Top Right Triangle is identified by YardCharts as a bearish reversal pattern, resembling an inverted right triangle:
- Horizontal Line (Long Side): Connects two or more near-equal market lows (Line 1, Image A).
- Vertical Line (Short Side): Extends from the horizontal to the highest market peak above it (Line 2, Image A).
- Hypotenuse: Connects descending market highs, indicating bounces above the horizontal (Line 3, Image A)
Pattern Formation Criteria
Top Right Triangle is identified by YardCharts as a bearish reversal pattern, resembling an inverted right triangle:
- Requires a minimum of two, ideally three, descending bounces from the left occurring above the horizontal line.
- Preferably, the ascent from the horizontal to the highs should be slower than the descent back to the horizontal, influencing the pattern's performance upon breakout.
Signal Confirmation
Top Right Triangle is identified by YardCharts as a bearish reversal pattern, resembling an inverted right triangle:
- A sell signal is generated when the price closes below the horizontal line post at least two bounces.
- A stop loss should be set just above the most recent bounce high before the breakout.
Refer to Image B for a visual representation of the pattern's key characteristics.
Historical Performance
YardCharts has identified 3 instances on Nasdaq and NYSE where this pattern preceded significant declines post-breakout, without hitting the stop loss, demonstrating at least a three-fold decrease from the breakout point to the trough.
