Descending triangle pattern

Twenty years of trading research show the descending triangle pattern has an 87% success rate in bull markets and an average profit potential of +38%. The descending triangle pattern is popular because it is reliable, accurate, and generates a good average profit. Discover how to recognize and capitalize on the descending triangle pattern to enhance your trading success potential. Chart Patterns & Stock Chart Insights & Lessons What Is a Descending Triangle Chart Pattern? A descending triangle is a powerful technical analysis pattern with a predictive accuracy of 87%. The pattern is flexible and can break out up or down, and is a continuation or a reversal pattern. A descending triangle has one declining trendline that connects a series of lower highs and a second horizontal trendline that connects a series of lows. A descending triangle can be bearish or bullish or a reversal or continuation pattern, depending on the direction of the price breakout. • A descending triangle occurring during a price uptrend, with a price breakout above the resistance line, is considered a bullish continuation pattern. (See chart below) • Conversely, a descending triangle occurring during a price downtrend, with the price breaking out above the resistance line, is considered a reversal pattern. KEY POINTS • The descending triangle has a horizontal support line and a declining slope resistance line. • If the price breaks out of the triangle in the direction of the previous trend, it is a cont...

Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California life, accident, and health insurance licensed agent, and CFA. She spends her days working with hundreds of employees from non-profit and higher education organizations on their personal financial plans. • The trendlines of a triangle need to run along at least two swing highs and two swing lows. • Ascending triangles are considered a continuation pattern, as the price will typically break out of the triangle in the price direction prevailing before the triangle, although this won't always occur. A breakout in any direction is noteworthy. • A • A • A stop loss is typically placed just outside the pattern on the opposite side from the breakout. • A What Does the Ascending Triangle Tell You? An ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out. A minimum of two swing highs and two swing lows are required to form the ascending triangle's trendlines. But a greater number of trendline touches tends to produce more reliable trading results. Since the trendlines are converging on one another, if the price continues to move within a triangle for multiple swings, the price action becomes more coiled, likely leading to a str...

Updated April 2, 2023 What is a Descending Triangle? A descending triangle refers to a bearish chart pattern used in Chart Patterns: The Basics Behind Descending Triangles Descending triangles, along with terms such as ascending triangles, head-and-shoulders, flag, pennant, and cup-and-handle are all examples of chart patterns, of which there are over 50 types according to noted investor Thomas Bulkowski’s book, “ So, what exactly are chart patterns? Chart patterns are frequently used in technical analysis, which is an analysis methodology for securities and helps in the identification of trading opportunities by charting the price trends of past market data. Chart patterns are used specifically by traders and investors to find significant patterns in the prices of publicly traded assets such as stocks or bonds. Patterns exist in every market throughout every time period and are heavily scrutinized because patterns in certain markets often show a high positive expectancy rate or have predictive value. As such, many investors and traders know that being able to identify patterns and the psychology behind a particular pattern is crucial to taking advantage of the pattern. Features of Descending Triangles Descending triangles are composed of two trendlines – one descending trendline and one horizontal trendline. An easy way of visualizing descending triangles without an actual image can be done via the phrase “flat bottoms, falling tops.” Descending triangles indicate to inve...

Updated June 13, 2023 Triangle Patterns Triangle patterns are a commonly-used technical analysis tool. It is important for every There are three types of triangle patterns: ascending, descending, and symmetrical. The picture below depicts all three. As you read the breakdown for each pattern, you can use this picture as a point of reference, a helpful visualization tool you can use to get a mental picture of what each pattern might look like. And here is the short version of triangle patterns: • Ascending triangles are a bullish formation that anticipates an upside breakout. • Descending triangles are a bearish formation that anticipates a downside breakout. • Symmetrical triangles, where price action grows increasingly narrow, may be followed by a breakout to either side—up or down. Ascending Triangle Patterns Ascending triangle patterns are bullish, meaning that they indicate that a The ascending triangle pattern forms as a security’s price bounces back and forth between the two lines. Prices move to a high, which inevitably meets resistance that leads to a drop in price as securities are sold. Although the price may fail to overcome the resistance several times, this does not lead to increased power for sellers, as evidenced by the fact that each sell-off after meeting resistance stops at a higher level than the previous sell-off attempt. Eventually, price breaks through the upside resistance and continues in an uptrend. In many cases, the price is already in an overall...

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The descending trendline is a bearish candlestick formation that occurs in a mid-trend. It usually takes place in a downtrend, and it signals that the impending breakdown will continue the overall downtrend. Similarly to the ascending triangle, the bearish triangle pattern consists of two simple trend lines that connect the lower highs and the horizontal support. In this blog post we will discuss how the descending triangle is created, what the message that the market sends is, as well as share tips on a simple, but effective trading strategy based on descending triangles. What the Descending Triangle Shows Us As illustrated below, the descending triangle is a bearish continuation chart pattern. The price action trades in a clear downtrend, as there is a series of the lower lows and lower highs. The sellers, who are in control of the price action, take a temporary pause to consolidate their most recent gains before extending the downtrend lower. Descending triangles usually take place in a mid-trend, as there is a first part of the trend - the start of a downtrend, while after the consolidation phase there is a continuation of the overall trend. Therefore, the descending triangle is usually in the middle of a bigger trend that helps the sellers to extend the downtrend. Consolidation of the price action takes form in the context of a descending triangle. Two trend lines, that connect the lower highs and the horizontal support, converge until they intersect. The narrower the...

• A descending triangle signals traders to take a short position to accelerate a • A descending triangle is detectable by trend lines drawn for the highs and lows on a chart. • A descending triangle is the counterpart of an What Does a Descending Triangle Tell You? A popular chart pattern used by traders, descending triangles clearly show that demand for an asset, • An existing downtrend before the descending triangle pattern appears. • A descending upper trendline can be drawn by connecting the upper points and indicates that the sellers are pushing prices downward. • The lower horizontal trendline acts as support as prices approach this level until the breakout occurs. • The downward trend continues after the breakout and is evident below the lower trendline. Descending Triangle Pattern Breakout Strategy This strategy anticipates a breakout from the descending triangle pattern and uses a combination of trading volumes and asserting the trend to capture short-term profits. When a stock is in a downtrend or a consolidation phase, traders watch for lower highs and lower lows being formed. Descending Triangle Reversal Pattern—Bottom The descending triangle reversal pattern at the bottom end of a downtrend is where the price action stalls and a horizontal support level mark a bottom. If the price action breaks to the upside from the descending triangle reversal pattern at the bottom, a trader can choose long positions. The Limitations of a Descending Triangle Since no chart p...

In this trading guide, you will learn how to trade the descending triangle pattern like a seasoned professional. In the technical world of trading, there are many different patterns to be aware of that will allow you to make more informed trading decisions. Once you master the Descending Triangle pattern , a simple chart pattern, you’ll gain a clear understanding of what goes on behind the price action. This simple If you’re new to trading, you may want to check out our beginner’s guide to trading to In this article, we’re going to explain the requirements of the descending triangle and how to spot it in real time. We’re also going to cover the psychology behind the descending triangle reversal. IV Conclusion – Descending Triangle Chart Pattern Table of Contents • • • Descending Triangle Uptrend Pattern The descending triangle pattern is a continuation chart pattern that develops in the middle of a downtrend. However, in some instances, this can play as a descending triangle reversal. Also known as the bullish descending triangle pattern. The descending triangle stock pattern is a versatile chart pattern that is viewed as a continuation pattern and a reversal pattern at the same time. The reversed version of the descending triangle is the The main features of the descending triangle pattern are: • A flat support line. • A descending trend line that connects a series of lower highs. • The flat support line and the descending trend line converge to a point. Imagine that, at ...