# P\&F Triangles ## What Are P\&F Triangles? Triangles form as prices contract on a P\&F chart. The X-Columns (up) form successive lower highs as the O-Columns (down) form successive higher lows. The inability of prices to break from this contracting range reflects a standoff between buying pressure and selling pressure. This standoff is resolved with the next P\&F signal. A Double Top Breakout makes the triangle bullish, while a Double Bottom Breakdown makes the triangle bearish. ## Triangle Width Triangles have at least five columns. The first four columns form the triangle and the fifth column marks the breakout or breakdown. There are at least two X-Columns with the second column forming a lower high. There are at least two O-Columns with the second column forming a higher low. Triangles can extend more than four columns as long as subsequent X-Columns continue forming lower highs and subsequent O-Columns form a higher low. Triangles are neutral patterns dependent on the breakout or breakdown for the signal. ## Triangle Breakout A Double Top Breakout signals a bullish resolution to the triangle pattern. Note that a trend line break is not enough. A basic P\&F buy signal, such as a Double Top Breakout, is required to complete the triangle and trigger the bullish signal. The chart below shows Chesapeake Energy (CHK) with a triangle forming in 2010. The blue lines outline the triangle. Note that these lines do not appear on the chart; they were added to make the pattern more visible. There were two O-Columns with higher lows and one X-Column with a lower high. This pattern turned bullish with the Double Top Breakout at 25.

P&F chart from StockCharts.com showing a triangle formation — P&F chart with a triangle formation.

The chart below shows the ProShares Ultra QQQ Fund (QLD) with a triangle forming after a sharp advance towards the end of 2010. This triangle represented a consolidation within an uptrend. Even though such consolidations are typically continuation patterns, they depend on a breakout before turning bullish. After a lower high and higher low, the ETF forged a Double Top Breakout to confirm a Bullish Triangle.

P&F chart from StockCharts.com showing a triangle breakout — A triangle formed after a sharp advance, which represented a consolidation within an uptrend.

## Triangle Breakdown A Double Bottom Breakdown signals a bearish resolution to the triangle pattern. Note that a trend line break is not enough. A basic P\&F sell signal, such as a Double Bottom Breakdown, is required to complete the triangle and trigger the bearish signal. The chart below shows Atlas Air (AWWW) with a long X-Column and then a triangle. While this pattern might be viewed as a potentially bullish continuation pattern, the triangle depends on a break for confirmation. After two lower highs and a higher low, the triangle broke to the downside with a Double Bottom Breakdown.

P&F chart from StockCharts showing a triangle breakdown — P&F Triangle Breakdown.

The chart below shows F5 Networks (FFIV) with a long O-Column that forged a Triple Top Breakdown. A consolidation formed after this long column and a triangle evolved. After a higher low and lower high, the stock continued lower with a Double Bottom Breakdown to turn the triangle bearish.

P&F chart from StockCharts showing a triangle formation after an uptrend which broke to the downside after which the stock price continued lower — A breakdown from the triangle formation resulted in the stock falling lower.

## Objectives and Risk Chartists can use the [Horizontal Count Method](https://chartschool.stockcharts.com/table-of-contents/chart-analysis/point-and-figure-charts/p-and-f-price-objectives/p-and-f-price-objectives-horizontal-counts) or the [Vertical Count Method](https://chartschool.stockcharts.com/table-of-contents/chart-analysis/point-and-figure-charts/p-and-f-price-objectives/p-and-f-price-objectives-vertical-counts) to establish Price Objectives. Price Objectives are not hard targets. Instead, they simply provide a guesstimate for an upside or downside objective. Chartists should also study the chart to assess risk. After an upside breakout, a move below the low of the last O-Column would produce a Double Bottom Breakdown and invalidate a triangle breakout. Chartists should also employ other technical analysis techniques to measure risk and monitor the unfolding trend. ## The Bottom Line Bullish and Bearish Triangles represent price consolidations that often precede a substantial move. This coiling of prices is similar to the tightening of Bollinger Bands. Volatility declines as the Bands narrow and as a Triangle coils tighter. A volatility contraction is often followed by volatility expansion, which produces the breakout or the breakdown. Short triangles (4 columns) after a sharp advance or decline are more likely to be continuation patterns. Large triangles (6+ columns) are more likely to mark a reversal. Regardless of the bias, a triangle is not confirmed until the Double Bottom Breakdown or Double Top Breakout. ## Further Study Thomas Dorsey's [*Point & Figure Charting*](https://a.co/d/cxyr4Pq) examines the basic ideas and key patterns of P\&F charts. Dorsey keeps his analysis straightforward; as a relative strength disciple, he devotes a complete chapter to relative strength concepts using P\&F charts. These concepts are tied in with market indicators and sector rotation tools to provide investors with all they need to construct a portfolio. Additionally, Dorsey incorporates lessons on how to use P\&F charts with ETFs.