Technical analysis has a number of patterns that can be used to make a profit out of most financial markets such as forex, stocks, bonds or commodities. We list the main ones so you can spot them when they arise in a chart and make a profit if your view turns out to be correct.

The first one of these technical analysis patterns is the rectangle. Start by drawing a line through the lows and the highs, if the market is flat you will notice the two lines are almost parallel. If the market closes above the lower line that's a buy signal. If the market closes below the top line that's a sell signal. Beware of the bull trap though: sometimes the price can close below the high line before going down all the way to break through the lower line (or vice versa for a bull market).

Ascending triangles in technical analysis are very similar to the wedges which I discussed in another article. A triangle in technical analysis is a formation where the line going through the highs converges to the same point as the line going through the lows. The resistance (top line) is parallel to the x axis of the chart whereas the support (the lower line) is upward sloping. This is a bullish signal as the price is expected to the break out of the triangle to the upside. If the pattern fails though, sell as the market breaks out below the triangle.

Descending triangles are the mirror concept in technical analysis, but for bear markets. If you draw a line going through all the lower highs and a line going through all the lows the will converge to a point. The support line will be parallel to the x axis whereas the resistance line will have a negative slope. This is a bearish signal as it indicates that a break out of the triangle to the downside is imminent.

Lastly, technical analysis considers symmetrical triangles. These are triangles where the slope of the highs and the lows are converging to a point. Both support and resistance have a non-zero slope. Symmetrical triangles are formed by rallies and sell-offs, each one smaller than the last. In technical analysis this indicates that an event is imminent. The formation indicates that the event will be explosive but we don't know in which direction, hence this pattern is better used in conjunction with other directional indicators.

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