Golden Triangle Long Entry Strategy

By Samantha Baltodano

TL;DR:

The Golden Triangle Long Entry strategy is a technical indicator used to identify entry points in stocks. It uses a moving average and looks for accelerating stocks that fall temporarily and return to an initial uptrend. The strategy looks for specific criteria such as an initial uptrend, pivot point, and price drop, as well as price and volume confirmation, to determine when to make a simulated Buy order.

What Is The Golden Triangle Long Entry Strategy?

The Golden Triangle Long Entry strategy is a moving average based technical indicator developed in an attempt to identify promising entries on stock charts. 

This strategy is an improvement on a popular "buy on a dip" practice that suggests making entries after a significant decline in hope that the price will eventually rise. 

The main principle of the strategy is to look for accelerating stocks that suddenly fall and then return to the initial uptrend. This sudden fall, anticipated to be a part of a bottom formation, defines the suggested entry point. 

While seeing bottoms appear on charts is quite common, their uptrend sections might be not as satisfying as you might expect. To combat this, the Golden Triangle strategy is said to help identify stocks that are likely to regain acceleration. 

How is it able to identify these uptrends?

The name of this strategy refers to a geometrical figure that forms on a chart when pullback and recovery fragments of the price action satisfy a certain set of criteria.

The strategy uses the following criteria for the Golden Triangle identification:

• Initial uptrend. Golden Triangles form after an uptrend, so the strategy initially looks for a stock's price that rises faster than its moving average. By default, the 50 day simple moving average (SMA) is used.
• Pivot point. This point defines where the price switches to a short-term downtrend.
• Price drop. After the pivot, price needs to drop below its SMA and maintain this level throughout the price drop. 

These criteria define the initial setup of the Golden Triangle. 

When the mentioned criteria are met, the strategy looks for price and volume confirmation to add a simulated Buy order. 

• The price confirms when after the previously described downfall, it finally closes above its confirmation SMA. 
• The volume confirms when it is at its highest within the last several days and greater than its long-term SMA. 

The volume needs to confirm on the same day the price confirmation happens or on a later day when the close price is greater than its previous value.

Test The Golden Triangle Long Entry Strategy

Great news! 

You can back test this exact strategy on historical data for any of your favorite symbols using TradingView. 

This strategy has already been built and all you have to do is log in and take it for a spin. You can access this indicator here.

If you’re new to back testing and to TradingView, don’t worry. I created a step-by-step guide you can follow to begin testing the Golden Triangle Long Entry Strategy.

Summary

• Golden Triangle Long Entry strategy is a moving average-based technical indicator
• Looks for stocks that experience temporary falls after an initial uptrend
• Uses specific criteria such as initial uptrend, pivot point, price drop, and price/volume confirmation to determine simulated Buy order
• The strategy aims to identify stocks that are likely to regain acceleration.

Golden Triangle Long Entry is just one of many strategies that Archaide automates. For a full list of strategies and studies available click here.

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