Candlesticks

DESCENDING TRIANGLE PATTERNS

Candlesticks E-Book

Descending triangle patterns are bearish chart patterns. ThedDescending triangle pattern is formed by drawing trend lines that connect to form the triangle pattern.

This triangle pattern forms as a continuation pattern during a downtrend. This is a really popular trend amongst traders. Hence, it shows a clear sign that demand for the stock is weakening.

Japanese candlesticks patterns have become the foundation of trading. Candlesticks tell us a story whether they’re long legged doji candlesticks, gravestone doji candlesticks as well as dragonfly doji candlesticks.

They warn us of the overall feeling and emotions of traders around the world. Using this information, we can make smarter trades.

DESCENDING TRIANGLE PATTERNS

Descending triangle patterns have two trend lines that connect lower highs as well as a group of lows. Watch for the move below the lower trend line which is support. It’s telling you downward momentum is building.

Breakdown for that stock is about to happen. Once that breakdown occurs traders can short the stock making it fall even lower.

Not all brokers have shares to short, so unless you have an account with a broker like Interactive Brokers, you could miss the move. Click here to read our Interactive Brokers Review.

Getting into options can be a good move as you can buy and sell puts. Put options take the short side of things. Read our posts on day trading options for income along with trading options for a living to delve deeper into options trading.

Descending Triangle Patterns

DESCENDING TRIANGLE PATTERNS – SUPPORT AND RESISTANCE

Trend lines are so important to trading triangle patterns. For a continuation pattern, like descending triangle patterns to be confirmed, they need to be a part of an established trend.

Because this is a bearish trend the duration and length isn’t has important as the strength of the pattern formation. The lower horizontal trend line needs at least 2 retain lows. This forms the line.

The lows don’t have to be exact but should be pretty close together. There does need to be some distance between the lows with a reaction in between them.

The upper descending trend line needs at least 2 highs to form the line. These highs need to be lower than the previous highs with some distance between them. If the most recent high is the same or higher than the previous high, the descending triangle isn’t valid.

The trend lines turn into key areas of support and resistance. When the stock breaks out of the descending triangle the support (lower horizontal trend line) now becomes resistance.

The stock will most likely go back up to test that resistance level before continuing its move down. Always remember that patterns can break down and reverse though.

Descending Triangle Patterns
The chart for ANTH had a large descending triangle form. When it was in it’s channel it was trading between $70-$95. As of today it’s now trading for pennies on the dollar. It hasn’t recovered from it’s bearish downtrend as of yet.

DESCENDING TRIANGLE PATTERNS – PATTERNS WITHIN PATTERNS

If you’ve been watching our candlesticks videos, you’ve probably heard how important it is to be able to find patterns within the patterns. Descending triangle patterns can take weeks or even months to form.

Being able to find and trade the patterns within the patterns allows you to capitalize on all moves. Patterns break down all the time based on news or the emotions of traders. The descending triangle pattern is primarily a continuation pattern but on some occasions it can be part of a reversal pattern.

It’s always important to get confirmation of a breakout before buying in so you’re not caught in a trap or fake out. Never forget you’re trading on the greed and fear of other traders.

That’s where these patterns come from. Bullish candlesticks, bearish candlesticks, doji candlesticks or even hammer candlesticks will make up these patterns giving you signs on what it’ll do.

DESCENDING TRIANGLE PATTERNS – USE TECHNICAL ANALYSIS 

As we stated before, triangle patterns use key levels of support and resistance to confirm a breakout. Without trend lines or the real bodies and wicks of candlesticks you wouldn’t be able to plot these levels.

Moving averages, MACD and RSI would be useless without this knowledge. Candlesticks are arguably the most important part of trading. They’re the base of everything we do. When you pair them with moving average lines as well as trend lines you’ll be able to foresee moves.

That’s not say a stock will do what these indicators are saying every time though. Technical analysis isn’t a crystal ball telling you the future. It sure helps though.

Descending Triangle Pattern
BLCM broke down out of the descending triangle but is going back up to test the new resistance levels to see if they hold.

DESCENDING TRIANGLE PATTERNS – THE BOTTOM LINE OF THE DESCENDING TRIANGLE PATTERN

Descending triangle patterns inform you of an impending breakdown of a stock. It’s important to spend time learning to find these patterns. Practice trading them in a simulated account before using real money.

descending triangle patterns

CHOOSE A COURSE THAT WORKS BEST FOR YOU

Learn about the essentials of candlesticks patterns and how to trade them
CANDLESTICKS PATTERNS

Learn about advanced candlesticks and how to trade candlestick reversal patterns
CANDLESTICK CHARTING

Fundamentals of stock trading 
STOCK TRADING

Simple day trading strategies on how to become a consistent and profitable day trader
DAY TRADING

Advanced day trading techniques
MOMENTUM TRADING STRATEGIES

Basics of swing trading and also some advanced swing trading strategies
SWING TRADING

Basic and advanced options trading strategies and how to buy and sell options contracts
OPTIONS TRADING

Set up your virtual trading platform in ThinkorSwim
THINKORSWIM

Set up your virtual trading platform in Interactive Brokers
INTERACTIVE BROKERS

 

 

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