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Mark Michaels

What is a Descending Triangle?

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A descending triangle is a bearish formation that usually happens during a declining trend. The descending triangle usually forms as a continuation pattern, however sometimes it can be a reversal pattern, typically at the end of a rising trend.



This pattern is characterized by a trend, which is usually created by the series of lower highs, and another horizontal supporting trend line that links a series of lows.

Traders usually keep an eye on for changes under the triangle support, because it indicates that the descending momentum is increasing and a breakdown is likely to happen.


When the breakdown occurs, it actually indicates that downside momentum will most likely persist or intensify even more. Descending triangles allow traders to significantly profit over a short period of time.

After a breakdown, traders typically enter short positions and that way force the asset’s price to drop even lower. A stop loss should be placed just above the support of the triangle.

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The descending triangle is a bearish formation that consists of a descending upper trendline and a flat lower trendline serving as support. A descending triangle tells investors that the sellers are outshining the buyers as the price of the asset keeps dropping. The formation completes itself once the price exits the triangle, following the market direction. 

Traders can easily identify the descending triangle if they know where to look. 

The pattern can only appear in a downtrend when the market is in the consolidation phase. During this phase, a downward sloping trendline links the highs, telling us that the price of an asset is dropping as bears outnumber bulls. 

In a descending triangle pattern, the lower trendline acts as a support and the price can reach this level and bounce off. This process repeats until the price breaks through the lower flat trendline. When this occurs, a downward momentum confirms the pattern and traders can enter a short position.

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A Descending Triangle is a bearish market chart pattern formed by a trendline, which connects higher lows and a horizontal trendline that connects the lows. Once traders spot a descending triangle they take a short position, bringing the price even lower.

This pattern indicates a decrease in demand and once it breaks through the horizontal trendline, it usually gains an even stronger downside momentum. This is a perfect opportunity for traders to take a short position and make a profit. 

However, every chart pattern has its limitations. Sometimes, false breakouts happen with the descending triangle. In this case, the price may go up to test the resistance zone before bouncing back to test the support. This process can occur multiple times.
 

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A descending triangle has a bearish pattern and features a lower resistance and sequence of lower peaks. It has two converging lines with the first showing high prices and the other marking the lows. The lines converge into a right triangle with a descending hypotenuse.
On its downward trajectory, the price encounters resistance at specific points to partially regain its losses. The result of a retracement being smaller than the previous one is a string of lower highs. The smaller peaks tell you more sellers are joining the market since they’re open to lower prices as a way of initiating a short position.
Consequently, selling pressure mounts as the market prepares to head to the apex. Meanwhile, values on the upper line continue to decrease shrinking the triangle until the bottom line’s support is broken. The crashed support becomes a resistance level confirming the security’s downtrend over time. Ensure both lines are touched a minimum of two times to verify the pattern.
 

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