A Descending Triangle Chart Pattern is a bearish continuation pattern. It is formed when prices are trapped between a descending trendline and a horizontal support line. The trendline and support line are forming a triangle, a right angle triangle even.
Descending Triangle Chart Pattern Example
The following things are important when identifying an descending triangle:
- There should be a horizontal supportline which has at least 2, but preferably more points where it is touched by price. In the example chart above we see a green supportline which is touched 4 times.
- There should be a falling (or descending) resistance line which has at least 2, but preferably more points where it is touched by price. In the example chart above we see a red resistance line which is touched 3 times.
- Ideally the trend leading up to the pattern was falling, this is why the pattern is called a continuation pattern.
- Ideally the overall volume declines during the pattern formation.
The ChartMill Team