Learn the stock market › Candlesticks and patterns › Lesson 4 of 6
Triangles and flags
Triangles
Peaks and lows are counted as in the lesson on head and shoulders: a close that is the highest or lowest of ten trading days each side. A triangle is two peaks and two lows in a row.
Ascending triangle. The peaks are within 2% of each other, and the second low is at least 2% above the first. The price hits the same ceiling from ever higher floors.
Descending triangle. The lows are within 2% of each other, and the second peak is at least 2% below the first.
Symmetrical triangle. The second peak is at least 2% lower and the second low at least 2% higher. The price moves less and less.
The breakout. The first close above the upper line or below the lower one, within 60 trading days after the last peak or low can be seen. The upper line is the higher peak in an ascending triangle and the later peak otherwise. The lower line is set the same way. Textbooks say an ascending triangle usually breaks up and a descending one down, but that the direction of the break is what counts, so we split by direction.
A real example
The latest upward break from a triangle among the 20 companies with at least a month after it came in Microsoft. The price closed above the line at $513.53 on Oct 2, 2026.
Microsoft: triangle broken upward, Aug 10, 2026 to Oct 2, 2026
MicrosoftThe line it broke
Up to Nov 6, 2026, the price has gone +2.5%.
Flags
A flag is a short pause after a fast move, like a flag on a pole.
The pole. The price closes at least 10% above the lowest close of the ten trading days before, and at the highest close in ten days.
The flag. Over the following days the price doesn't close above the top of the pole and doesn't fall below half of the rise.
The breakout. The first close above the top, at least six and at most twenty trading days after it. A bear flag is the same thing after a fall of at least 10%.
What happened after the breakouts?
Held means the price had kept going the way of the break one and three months later: risen after an upward break, fallen after a downward one. Ordinary period is the same thing counted from every day of the same company.
| Pattern | Times | Held | Ordinary period |
|---|---|---|---|
| Triangle, break up, 1 mo | 467 | 63.6% | 60.9% |
| Triangle, break up, 3 mo | 459 | 67.8% | 67.6% |
| Triangle, break down, 1 mo | 327 | 38.2% | 39.1% |
| Triangle, break down, 3 mo | 326 | 28.2% | 32.3% |
| Bull flag, 1 mo | 316 | 55.7% | 59.9% |
| Bull flag, 3 mo | 309 | 69.3% | 66.2% |
| Bear flag, 1 mo | 164 | 40.9% | 40.8% |
| Bear flag, 3 mo | 160 | 40.0% | 35.1% |
After a break from a triangle the price kept going about as often as on an ordinary day. The differences can't be told apart from chance.
The flags didn't differ from an ordinary day by more than chance tends to give either.
A breakout is the price moving past a level where it stopped before. How often old peaks and lows have held is in the lesson on support and resistance.
Test yourself
A stock breaks up out of an ascending triangle. What do you know?
More numbers are on the Microsoft stock page.