How to Trade the Descending Triangle Pattern

After price bounces off the support level multiple times, posting lower highs, we can anticipate a potential downside breakout. The minimum distance that price moves prior to the breakout is measured from the initial high. This distance is projected lower after price breaks out below the support level. On the other hand, a descending triangle breakout in the opposite direction becomes a reversal pattern. Considered the opposite of the ascending triangle, this pattern is also known as the bearish triangle descending pattern. Make sure you first get familiarized with the descending triangle pattern before you commit any real money with this chart pattern.

In this strategy, traders simply have to see an agreement between the support breakout and the Chaikin Money Flow reading. Once the descending triangle breakout happens, we need to have a Chaikin Money Flow reading below the -0.2 level. Using the Chaikin Money Flow indicator, along with the descending triangle breakout creates a very powerful trading strategy.

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1. Use these simple trading tricks that are very powerful when used in the right context.
2. The same concept of measuring the distance from the support to the first high is used to determine targets.
3. But, if you are looking for an entry point following a symmetrical triangle, jump into the fray at the breakout point.
4. One important aspect to keep in mind when trading the breakout is where you should place your stop-loss order.
5. The horizontal level is a zero slope line.Wait for a convincing close below the horizontal level.This is a convincing close below the horizontal level.

Simply put, trading the descending triangle pattern means you are looking to join a trend. As a continuation chart pattern, it helps you find a price signal where you can enter a position and make profits. The descending triangle pattern is a type of chart pattern often used by technicians in price action trading. The pattern usually forms at the end of a downtrend or after a correction to the downtrend. However, it can also occur as a consolidation in an uptrend as well.

What Is Technical Analysis?

We have to take it one step forward and confirm the breakout by using the Chaikin Money Flow indicator to confirm the supply-demand imbalance. The readings that we get from the Chaikin Money Flow will tell us if the sellers have stepped in or not. This compression to the downside is what makes the pattern bullish.

How do You Identify and Use the Descending Triangle Candlestick Pattern?

These formations are, in no particular order, the ascending triangle, the descending triangle, and the symmetrical triangle. Heikin-Ashi charts can apply to any market and are a trading tool used in conjunction with technical analysis to assist in identifying trends. In this strategy, traders watch for the descending triangle pattern to form and wait for the bullish trend to begin using the Heikin Ashi charts.

Technical traders have the opportunity to make substantial profits over a brief period. They often watch for a move below the lower support trend line, suggesting that downward momentum is building and a breakdown is imminent. Traders often enter into short positions to further lower the asset’s price.

Technical analysis is a trading strategy that relies on charting the past performance of a stock or other asset to predict its future price movements. This strategy uses tools and techniques to evaluate historical data, including asset prices and trading volumes. Some of the tools used include charts and graphs such as triangles. A symmetrical triangle is composed of a diagonal falling upper trendline and a diagonally rising lower trendline. Measure the distance from the horizontal support to the initial high and project this distance from the breakout level. As the name suggests, the descending triangle pattern breakout strategy is very simple.

One of the main characteristics, unique to the Chaikin Money Flow indicator, is its ability to gauge the buying and selling power. Just count how many pips there are from the flat support line to the highest point of the triangle. Once you have that measurement, project it to the downside starting from the flat support level. Descending triangles are a bearish pattern that anticipates a downward trend breakout. A breakout occurs when the price of an asset moves above a resistance area, or below a support area.

Essentially, this pattern is a consolidation that indicates a pause in upward momentum. It can either resolve to the upside or downside depending on whether or not shares are re-accumulated during the consolidation. You only have to check if the Chaikin Money Flow line has spent more time below the zero line during the time the descending triangle emerged. Also note that using small periods (less than 10) could make your moving averages more sensitive to noise.

What is a descending triangle pattern?

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 descending triangle is a chart pattern used in technical analysis. The pattern usually forms at the end of a downtrend but can also occur as a consolidation in an uptrend.

Therefore if you are new to trading the descending triangle stock pattern, you need to have a lot of practice. Familiarizing yourself with it in the simulator will allow you to build your own custom triangle trading strategies. Additionally, the breakout candle must also produce a close below the flat support level for a valid trade setup.

The basic premise of using this strategy is to look at volume once you’ve identified the pattern. You can typically observe that volume begins to diminish toward the end of the descending triangle pattern formation. Usually, we like to see volume dry up into the consolidation if it is to resolve upward. More volume usually indicates more selling pressure in the descending triangle pattern. Let’s now stop for a second and see how to trade the right way the descending triangle as a continuation pattern. You can see how the projected triangle depth measurement becomes a very accurate profit target.

This chart is characterised by a descending upper trendline and another flatter and horizontal trendline, which is lower than the first one. The patterns connect the beginning of the upper trendline to the beginning of the lower line. The upper line connects the highs while the lower line connects the lows in that security. Traders should watch for a volume spike and at least two closes beyond the trendline to confirm the break is valid and not a head fake. Symmetrical triangles tend to be continuation break patterns, which means they tend to break in the direction of the initial move before the triangle forms. So if an uptrend precedes a symmetrical triangle, a trader would expect the price to break to the upside.

Named for its resemblance to a series of triangles, the triangle chart pattern is created by drawing trendlines along a converging price range. However, the descending triangle reversal pattern can potentially reward you with bigger profits if traded in the right context. We only trade the descending triangle reversal pattern when this price formation develops at the end of a bullish trend, and in the context of an uptrend. In this trading guide, you will learn how to descending triangle chart pattern 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.