From Noise to Tranquility: Interpreting the Breakout Signals Behind the Triangle Pattern

The market’s transition between chaos and calm often contains important technical signals. The triangle pattern cannot solely determine the direction of the price movement, but its process of narrowing from wide to narrow can reflect significant changes in market sentiment—this is key to understanding the eve of a breakout.

The Shift in Market Sentiment: The Deep Meaning of Volatility Contraction

What does a significant contraction in price volatility represent? When the market was previously noisy, prices fluctuate violently, with bulls and bears争执不下, creating a tense trading atmosphere. But after entering the triangle zone, this noise gradually turns into silence—the amplitude of fluctuations clearly diminishes, and the disagreements between bulls and bears gradually fade.

This narrowing to some extent relates to lower liquidity over the weekend, but more importantly, it indicates that market participants’ opinions are converging. Prices become relatively mild, as if the market is brewing for a major turning point—like the calm before a storm. At this stage, we can understand that the market is gathering strength, preparing for the upcoming breakout.

Bollinger Bands Confirmation: From Contraction to Expansion in Technical Terms

To verify this observation, the Bollinger Bands (BOLL) indicator can provide clear confirmation. On the 4-hour timeframe, we see the same contraction phenomenon unfolding—the upper and lower bands are gradually approaching the middle band, like a pipe gradually narrowing.

During this process, the price (water flow) is temporarily squeezed and slowed down. When the Bollinger Bands complete their contraction and are about to expand, it’s like opening the valve of the pipe—the price volatility will significantly increase, and the market will shift from static to dynamic. This turning point is often when the real breakout occurs.

Trading Perspective: Conservative vs. Aggressive Strategies

How should traders with different risk preferences respond to such patterns?

Conservative approach: Carefully observe whether the upper and lower boundaries of the triangle are effectively突破 or跌破. Even if the current chart shows the price above the triangle and above the middle Bollinger Band, one cannot easily confirm an upward breakout. The reason is that the pressure near the $90,000 mark is too close—this is not only a technical resistance but also a psychological barrier, requiring confirmation of a successful突破.

Aggressive approach: Traders can flexibly adjust their strategies based on their risk tolerance, without strictly waiting for confirmation signals of突破 or跌破.

Regardless of the strategy adopted, the key is to understand the essence of the process from noise to calm: the market transitions from controversy to a temporary consensus, and this shift itself is an important precursor to a breakout.