Descending Triangle

A Descending Triangle is a graphical representation of bearish-focused price patterns mostly used in technical analysis to determine and confirm existing trend continuation.

Formation of a Descending Triangle

It is visually represented through a narrowing range of lines originating from high and low prices to a point where it meets, representing a triangle in the end.

The main feature peculiar of this type of the Descending triangle is that it would generally have a descending trend line (or a resistance line) joining the lower points and lower highs. From here, a horizontal trend line (or the support line) would connect the lower points at approximately the same level. It is visually represented through a narrowing range of lines originating from high and low prices to a point where it meets, representing a triangle in the end.

Interpreting a Descending Triangle

After determining the points to form a descending triangle, analysts can confirm on a downward trend in the market or a signal to sell. This can be identified when the price movement crosses below the support line and has approximately covered a third of the distance toward the Target Price line. 

Targeting a Price Level

It is assumed that after the formation of the figure according to the pattern of the descending triangle, the cost usually falls to the target level. This will be calculated as follows: 

T = S – H

Where:

T – Target price level;

S – Support (horizontal line);

H – Height of the figure (the distance between the lines of support and resistance at the beginning of the figure)

Descending Triangle

Risk disclaimer "Market Solutions Ltd – Suite 305 Griffith Corporate Centre P.O. Box 1510 Beachmont, Kingstown, St Vincent and the Grenadines is a financial services institution outside the European Union Area, which is subject to the supervision of the IFMRRC Certificate 0395 AA V0128 Trading in Forex/ CFDs and Other Derivatives is highly speculative and carries a high level of risk. It is possible to lose all your capital. 70% of trading deals can be unprofitable. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. Speculate only with funds that you can afford to lose. This Website may contain information in particular regarding financial services and products that could be regarded b a E.U. supervisory authority as an offer of financial services targeted in Europe. ESMA intervention measures do not apply to customers of Market solutions Ltd and it is your responsibility to choose a company which is most suitable for your trading needs. By clicking continue you confirm that you have read, understood and agree to the risk disclosures, terms of service, cash policies, privacy policies and this notice and that you are visiting this website on your own initiative, without any encouragement whatsoever from Umarkets.com or Market Solutions limited." Cookies notification: “We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we assume that you are happy with it. Continue
×

Help with deposit?