26

Question 1

According to Al Brooks, what is the broad definition of a triangle?

Answer 1

Any sideways move with three pushes up or down.

Question 2

What is the minimum requirement, in terms of legs, for a pattern to be considered a triangle?

Answer 2

Five legs, resulting from at least three pushes in one direction.

Question 3

A triangle that is sloped somewhat up or somewhat down is called a _____.

Answer 3

wedge

Question 4

What dual role can triangles serve in a trend?

Answer 4

They can be either a reversal pattern or a continuation pattern (a flag).

Question 5

What market phase is typically required for most reversal patterns, including triangles, to form?

Answer 5

A trading range or sideways market.

Question 6

In a _____ triangle, the top is relatively flat and the bottom is rising.

Answer 6

ascending

Question 7

In a descending triangle, the bottom is relatively flat and the top is _____.

Answer 7

falling

Question 8

What term is used for a triangle where the legs are getting bigger?

Answer 8

An expanding triangle.

Question 9

A triangle is a type of tight trading range contained between two lines that are most often _____.

Answer 9

converging

Question 10

In a horizontal triangle pattern, what is the probability of a bull breakout versus a bear breakout?

Answer 10

It is a 50/50 chance for either a bull or bear breakout.

Question 11

What is the probability that the first breakout from a horizontal triangle will fail?

Answer 11

There is a 50/50 chance the first breakout will fail.

Question 12

When a triangle forms, which direction has a slightly greater probability of a successful breakout?

Answer 12

The direction of the trend that preceded the triangle.

Question 13

When a trading range lasts for 20 or more bars, what does this imply about the breakout probability?

Answer 13

The probability of an up or down breakout becomes very close to 50/50, regardless of the prior trend.

Question 14

Why is a tight trading range considered a ‘magnet’?

Answer 14

It represents an area of price agreement, and the market often gets pulled back into it after moving outside.

Question 15

What does a triangle that forms late in a trend usually signify?

Answer 15

It is usually the final flag before the trend enters a trading range or reverses.

Question 16

After a breakout from a final flag triangle, what is a minimum price target for the subsequent reversal?

Answer 16

A test of the apex of the triangle.

Question 17

If you are in a tight trading range late in a trend, what should you assume about a breakout?

Answer 17

That it will likely fail within about five bars and be pulled back into the range.

Question 18

In a falling wedge pattern, what is the approximate probability of a bull breakout?

Answer 18

Approximately 75% or more.

Question 19

A falling wedge pattern often behaves like what type of flag?

Answer 19

A bull flag.

Question 20

In a rising wedge pattern, what is the approximate probability of a bear breakout?

Answer 20

Approximately 75%.

Question 21

What often happens before the main breakout of a wedge pattern?

Answer 21

There is often an attempted breakout in the direction of the preceding trend first, which fails.

Question 22

What name does Al Brooks give to a pattern of two or more consecutive inside bars (e.g., II or III)?

Answer 22

A triangle on a smaller time frame chart.

Question 23

If a pattern has converging lines but is angled upward or downward instead of being mostly horizontal, what term is used?

Answer 23

Wedge.

Question 24

A rising wedge in a bull trend would be considered what type of pattern?

Answer 24

A wedge bear flag, suggesting a probable bear breakout.

Question 25

Within a trading range or triangle, what is a common structure for the individual legs?

Answer 25

They often subdivide into two smaller legs (e.g., one pullback two).

Question 26

As bears repeatedly fail to break out to the downside of a triangle, and each attempt gets weaker, what is likely to happen?

Answer 26

The market will probably have to go higher to find sellers, and the bears eventually give up.

Question 27

In a bull trend, a small triangle with fewer than 20 bars is more likely to be a _____ rather than a breakout mode setup.

Answer 27

bull flag

Question 28

What is a likely outcome of a strong, climactic breakout from a triangle that formed late in a bull trend?

Answer 28

It is likely an exhaustion gap, and the breakout will probably fail and reverse.

Question 29

What is another name some traders use for an expanding triangle?

Answer 29

A megaphone pattern.

Question 30

An expanding triangle that is large enough (e.g., 15+ bars) is always also what type of reversal pattern?

Answer 30

A major trend reversal.

Question 31

An expanding triangle bottom is always a _____ major trend reversal.

Answer 31

lower low

Question 32

After an expanding triangle bottom forms and the market breaks above the top, what pattern does it often try to form next?

Answer 32

A bigger expanding triangle, by forming an expanding triangle top.

Question 33

According to the 80% rule for sideways markets, what is the likelihood that any single breakout or reversal attempt will fail?

Answer 33

There is an 80% chance it will fail and the market will continue sideways.

Question 34

What is it called when smaller versions of a pattern appear within larger versions of the same pattern?

Answer 34

A nested pattern.

Question 35

What is the significance of identifying a nested pattern, such as a nested expanding triangle top?

Answer 35

It increases the probability that the pattern will work as expected.

Question 36

If an expanding triangle forms during a bull trend, it is considered an expanding triangle _____.

Answer 36

bull flag

Question 37

If an expanding triangle forms after a bear trend, it is considered an expanding triangle _____.

Answer 37

bottom

Question 38

What is the general principle regarding the appearance of a chart pattern?

Answer 38

The better a pattern looks, the more likely it is to behave as expected.

Question 39

What is a key characteristic of a 'bad-looking' pattern that computers and traders are likely to ignore?

Answer 39

Poor symmetry, such as tiny legs at the start and very long legs at the end.

Question 40

If leg two of a potential expanding triangle has only two bars and leg four has 50 bars, how should this pattern be interpreted?

Answer 40

It should be ignored as an expanding triangle and viewed as something else, like a tight trading range.

Question 41

Why are bad-looking patterns considered low probability?

Answer 41

Because if computers and traders are not trading them, there won't be enough money flowing to make the pattern work as predicted.

Question 42

If you are unsure whether a pattern is a wedge or a triangle, what is the key takeaway?

Answer 42

It doesn't matter what you call it; both are trading ranges in breakout mode.

Question 43

The more horizontal a triangle-like pattern is, the more the probability of a breakout approaches _____.

Answer 43

50/50

Question 44

The more angled a triangle-like pattern is (a wedge), the greater the chance of a breakout in the _____ direction of the slope.

Answer 44

opposite

Question 45

An expanding triangle can sometimes have more than the minimum five legs, such as _____ or _____ legs.

Answer 45

seven or nine

Question 46

What is a defining feature of an ascending triangle's boundaries?

Answer 46

A relatively flat top and a rising trend line along the bottom.

Question 47

What is a defining feature of a descending triangle's boundaries?

Answer 47

A relatively flat bottom and a falling trend line along the top.

Question 48

What is a 'high one buy' in the context of a bull trend and a pullback?

Answer 48

An entry to buy above the high of a bar after the first attempt to reverse up from a pullback.

Question 49

A very strong breakout from a trading range where consecutive bars close on their lows is often a sign of what?

Answer 49

The opposite side (bulls) giving up, confirming the breakout.

Question 50

How does Al Brooks recommend drawing trend lines for a triangle when a new reversal point occurs?

Answer 50

He adjusts the lines to incorporate the new reversal points, sometimes ignoring earlier points which become outliers.