Figure 2: descending triangle example

As shown in Figure 2, the price chart of Unionmet shows a flat support around the $0.51 price level. For nearly 3 months, this support level gave a false sense of security to investors because while the support is holding well, every price rally is getting lower and lower. It is suggesting strong overhead selling at every rebound. Investors should be cautious of such characteristic. This is a very bearish sign as it means that investors are very keen to sell and the selling pressure is strong as the price is unable to trade higher. In middle of Jul'07, the price broke out of the support and went on to make new lows. Do note that it is away from the apex of the triangle.

Last but not least, symmetrical triangle. This price pattern has an even bias to a breakout on the upside or downside. Price will form lower highs as well as higher lows, during its convergence towards the apex of the triangle. This shows that the buyers and sellers are evenly balanced and the price then trades in a converging manner until a breakout to either side happens.