An interesting question

A forum member at Forex Factory put up a chart earlier showing a triangle consolidation on the EUR/USD that never broke out of consolidation and just kept chugging away in a tighter and tighter range outside of the triangle. He was wondering why this was the case, and I figured I had a decent answer. Probably the main reason (at least to me) is that when it comes to technical analysis, there's obviously no sure fire indicator/pattern that always succeeds 100% of the time. The likelihood of a certain outcome based on the formation itself is a function of a lot of factors in the market: news, volatility, volume, trader attitude, the signal itself. I can say for myself that there are some patterns and signals that I trust quite a bit more than others, and I'm sure plenty of other traders have similar rules. Anyway, my reasoning for this is below.

As a test of this idea, go and find a chart with a triangle formation, and then draw possible previous triangle formations. The obvious question to ask yourself is why did the consolidating pattern not break out of any of the previous patterns? The answer is, as I mentioned, that a pattern does not GUARANTEE a result, but rather indicates an increased probability of a particular result in the future. How extreme the consolidation becomes before any kind of significant move in price is a function of market action, news, volume, volatility etc.

As you can see on the first chart, there is a single triangle pattern, which is exactly how you might expect to draw it had you opened your chart at this moment. However, below, take a look at the triangles others would have drawn had they opened their charts an hour or so before or an hour before that even. Note that none of them display convincing breakouts of the consolidation and in fact, they only serve to consolidate price in an even tighter range still. Another point to keep in mind, is that the slope of the upper bounds on the price has not changed much in the recent past, while the lower bounds are decreasing continuously.