Descending Triangle Pattern Start Using Descending Triangle in Trading

An ascending triangle chart pattern is bullish continuation patterns that indicate a stock price is expected to move in a bullish trend. The upper line is horizontal and acts as a resistance line, whereas the lower line represents the support line. The traders will go for higher low on the support line, and it finally joins with the resistance line to form a triangle. The basic understanding is that the pattern shows that each time traders try to push prices lower.

The Website shall have a worldwide, royalty-free, non-exclusive, perpetual, and irrevocable right to use feedback for any purpose, including but not limited to incorporation of such feedback into the Website or other Website software or facilities. We may provide you with various money solutions and options which are generally available basis your investment profile or those which are generally held by persons of similar investment profile. You authorize us to use/disseminate the information to provide the Financial Solutions however it is not necessarily for you to act on it. It only serves an indicative use of information which you may execute in the manner agreed by you. This Agreement describes the terms governing the usage of the facilities provided to you on the Website.

Components of Triangle Chart Patterns

Downside breakout happens when the price breaks below the support line. Of course, specifically in the case of the descending triangle pattern, traders are looking for a breakout that occurs below the lower trendline. In other words, the prediction is set in motion when – amidst a descending triangle pattern – the stock price reaches a lower-than-seen-recently low. The breakout in an ascending triangle can occur to the upside or downside.

• “Wait for the price to break below the lower support line”, as in the first example, and then look to place a sell order on the retest of the support level .
• As the traders are panic because of stock price falls, more sellers will short their positions, and at that point the breakout has happened, and the stock price starts moving downwards.
• After identifying the lower volume, it is a good strategy to measure the distance from the first high and low.
• You may receive from time to time, announcement about offers with intent to promote this Website and/or facilities/products of ABC Companies (“Promotional Offers”).

Every trader is keen to invest in promising stocks and exploit investment opportunities to maximize their investment return. Apart from the fundamental analysis of stocks, technical analysis also plays a vital role in evaluating investments and figuring out trade opportunities. Based on price movement, volume, and other trading activities, the technical analysis helps the traders and analysts in estimating the overall value of a security or stock. It is formed in the downtrend and indicates that the bears are aggressive.

Descending Triangle Chart Pattern With Examples

Accordingly, before making any final decisions or implementing any financial strategy, you should consider obtaining additional information and advice from your advisor or other financial advisers who are fully aware of your individual circumstances. For more details, please also refer to the Legal Disclaimers provided on the Website. The price target for this pattern should be set by subtracting the entry price and the vertical height between the two trend lines at the breakdown. KPR mill breaks out of the Descending triangle pattern on weekly chart. Disc ; Invested from lower levels, this is for educational purpose only. The bottom of the triangle usually is the flat level of support, with the upper side sloping downwards as the price makes lower highs.

After the consolidation period, the price starts moving upwards, which is a breakout from the resistance line and moves upwards. A descending triangle is a bearish continuation pattern that indicates a stock price is expected to move in a bearish trend. The lower line is horizontal and acts as a support line, whereas the upper line represents the resistance line. After the consolidation period, the upper trend line represents sellers eager to relieve their position by decreasing the prices. As the traders are panic because of stock price falls, more sellers will short their positions, and at that point the breakout has happened, and the stock price starts moving downwards. However there are also scenarios where descending triangle is formed after and up move and stock breaks out on upside to continue.

Technical analysis: Ascending & descending triangles

This stock is making lower highs with same low level on daily chart by forming a Descending triangle, breaking 2000 level will open the downside upto 1800 level. Triangle is a classic price action pattern that is applied by technical analysts to make predictions trading different financial markets. Depending on the shape of the triangle, there are three main variations of this pattern. Its meaning changes dramatically from one to another so it is crucially important for you to know the difference. As we have discussed the symmetrical & ascending triangles in the previous chapters, let’s now look into the descending triangles. Then comes the descending triangle under technical analysis to be able to accumulate the stock which has short-term pain.

Signal that the uptrend may be over and that a downtrend may be beginning. In general, a descending triangle is considered a more reliable bearish pattern compared to a falling wedge, as the falling wedge can sometimes be a false signal for a reversal and instead lead to a continuation of the downtrend. As can be seen from the chart above, the stock’s movement had been contracting since September 2022 as it was going sideways. The support levels almost remained intact during this period but the resistance kept on coming down on account of lower peaks. The falling trendline is clearly representing the increasing selling pressure in the stock due to which every new peak was lower than the prior one. With descending triangles, trend lines converge with a horizontal trend line for lower support, and a negative sloping resistance trend line.

Certain information on Website may be on the basis of our own appraisal of the applicable facts, law and regulations in force at the date hereof. There are no charges or fees to be paid by you for use of this Website. However, you are responsible for all telephone access fees and/or internet service fees that may be assessed by your telephone and/or internet service provider. You further agree to pay additional charges, if any levied by Third Party Service Provider, for the facilities provided by them through the Website .

Occasionally, a strong support line may form and cause the prices to bounce off. Whatever the case may be, an explicit descending triangle pattern is clearly visible. An ascending triangle pattern is characterized by a series of higher lows and a flat high, and a descending triangle pattern is characterized by a series of lower highs and a flat low. A symmetrical triangle pattern is characterized by a series of equal highs and lows that form two converging trend lines.

• This pattern indicates “weakening support” and an approaching breakout to the downside.
• Please read these Terms and Conditions (“Terms of Use”) carefully.
• One should consider buying at-the-money put options on breakdown from the said pattern as prices are then likely to decline with a strong momentum which would prevent erosion in the time value of the put option.

This can be seen as a sign of weakening buying pressure and increasing selling pressure. A triangle pattern breakout occurs when the price of a stock or other asset breaks out of the pattern by moving above or below one of the trend lines. Often the descending triangle pattern is often misread even by the experts as the formation of a bottom after the downtrend. Like any support/resistance or trendline breakout/breakdown, volume plays a very important part in confirming the strength of an ascending triangle breakout/breakdown.

Although a little bit higher than the senior support level, the price finds resistance, and the price starts to move back down. The potential for the breakout direction can be identified by looking at the pattern’s slope, volume, and previous price action. Traders usually set a stop-loss order on the opposite side of the pattern to protect themselves against a false breakout. When the upside breakout happens, there will be an increase of volume after the breakout. One should consider buying at-the-money put options on breakdown from the said pattern as prices are then likely to decline with a strong momentum which would prevent erosion in the time value of the put option. During the period of consolidation, before breakout volume declines, a pause or a consolidation during the trend creates confusion for many traders, and the situation seems like indecision.

Strong patterns would be formed when the resistance/support line is dark blue and the trendline is blue in color. One can also look for volume to be below the average 50-bar SMA of volume before the pattern forms and then atleast 2x the 50-bar SMA of volume after it is formed. The simplest strategy to trade using the descending triangle pattern is the breakout strategy. To capture short-term profits, a trader may pick a stock that is either in a consolidation phase or part of a downtrend. Traders often watch for a breakdown below the horizontal support level as a potential sell signal, as it indicates a potential trend reversal and a further decline in the price of the security or asset. The descending triangle is one of the top continuation patterns that appears mid-trend.

The reliability of a descending triangle as a bearish pattern depends on the context and market conditions. It is considered a reliable pattern when formed after an uptrend and is confirmed by a breakdown of the support line, with increased volume and a strong move downward. In a triangle pattern, the movement of share price between consolidation period can be either higher lows or Lower high, and the triangle is formed by joining a support and resistance line. Although ascending triangles are not directly displayed in Investar software, you can indirectly get them by enabling the Auto-Support/Resistance and Auto-Trendline features.

Investors may please refer to the Exchange’s Frequently Asked Questions issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard. Did you know that if you’re outdoors in a fairly open space , you can actually spot the rain approaching for miles? If you’re not a fan of the rain and witness vertical lines forming between the sky and the ground over the horizon it’s probably time for you to find shelter because these lines indicate a downpour. Always be aware of the trend direction before the consolidation period.

This kind of volume support behind the breakout is very encouraging. As the breakout is confirmed, the nearest level to which the stock could rally is around INR 900 which is a very strong resistance. Once this resistance gets taken out, a further potential to around INR 1,150 would be opened.

The pattern represents a pause in the price trend, and the price consolidates in a range. One is a downside-slopping trend line, the other is an upward-moving line that also represents the support area for the price, and the first line represents the resistance zone. Higher and lower price points must touch the trend lines at least five times during the consolidation period. The triangle pattern is small, takes 10 to 20 trading sessions to complete, and one should wait for the price to break out of the pattern instead of taking an early position.

Any information and commentaries provided on the Website are not meant to be an endorsement or offering of any stock or investment advice. The facilities on the Website are not intended to provide any legal, tax or financial or securities related advice. You agree and understand that the Website is not and shall never be construed as a financial planner, financial intermediary, investment advisor, broker or tax advisor. The facilities are intended only to assist you in your money needs and decision-making and is broad and general in scope. Your personal financial situation is unique, and any information and advice obtained through the facilities may not be appropriate for your situation.

Like its counterpart, the higher the number of descending triangle breakout price highs and lows that line up to display a descending travel pattern, the higher the likelihood of the stock price declining when a breakout is spotted. Descending triangle pattern is a bearish scenario with the series of consistent lower highs, forming a clear slanting line. This series is accompanied by a horizontal line that connects the top part of these lows.

These are meant for general information only or to meet statutory requirements or disclosures. ABCL or any of its employees are in no way liable for the use of the information by you, when making any decision or investing or trading through any investment vehicles or ABC Companies, or any other third party which may be engaged in offering of these services. This Website is provided to you on an “as is” and “where-is” basis, without any warranty. Any access to information hosted on third party websites of billers/banks/merchants/ABC Companies etc. is not intended and shall not be treated as an offer to sell or the solicitation of an offer to buy any product/offering of these ABC Companies or third parties. DISCLAIMER The information contained herein is generic in nature and is meant for educational purposes only.