A triangle appears to reflect a balance of forces, causing a sideways movement that is usually associated with decreasing volume and volatility. The triangle pattern contains five overlapping waves that subdivide 3-3-3-3-3 and are labeled a-b-c-d-e. Triangles fall into three main categories as illustrated in Figure 1. It is quite common for wave B of a contracting triangle to exceed the start of wave A in what may be termed a running triangle, as shown in Figure 2.

A triangle always occurs in a position prior to the final actionary wave in the pattern of one larger degree, i.e., as wave four in an impulse, wave B in an A-B-C, or the final wave X in a double zigzag or combination.

Key Takeaway: See a triangle? Expect prices to first thrust -- and then, reverse.

For a complete description, please read Elliott Wave Principle: Key to Market Behavior by Robert Prechter and A.J. Frost.