What happens during triangles formation ?

Below is my reply at Forexfactory.com

Originally Posted by SeekingLight

How many of these have you seen and traded before and how certain are you of pattern probability and direction?
What are your triggers and possible endpoints / projected targets?

What does the formation mean in itself?

Triangles are psychological.

If the previous trend is bullish

1) the upper side (bearish) shows a selling (profit-taking). Selling lower and lower because traders are afraid if the price never return to the last maxima.

e.g : Oh crap... price is going down. 1800 is the highest, I'll sell at 1780 when it comes back there).

2) the lower side (bullish) shows people (who previously took profit or missed the last rally) are buying the dips, they are buying higher and higher because they are afraid of missing the move.

e.g : Oh crap again.... 1600 seems like a support, it 1650 now .. I'll buy limit at 1620