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A bearish continuation pattern with a flat support line and falling resistance. Compression leads to a breakdown, typically downward.
The Descending Triangle is a bearish continuation pattern characterized by a flat support line at the bottom and a falling resistance line (lower highs) converging toward it. Price compresses until a breakdown occurs.
The pattern typically forms during downtrends and resolves with a downward breakdown approximately 70% of the time. The flat support shows buyers defending a level, while the lower highs show sellers becoming more aggressive.
The descending triangle tells a story of mounting selling pressure. Price hits support and bounces - but each time it rallies, sellers step in at lower prices. They're becoming more impatient, less willing to wait for higher prices.
The buyers at support keep defending their level, but they're fighting a losing battle. Each rally fails at a lower high. Each lower high signals that the ceiling is falling. Eventually, the demand at support is exhausted.
When the breakdown comes, it's often sharp - all those shorts who were accumulating on lower highs are now vindicated, and buyers who were defending support capitulate. This is why volume typically expands on the breakdown.
Conservative: Enter on confirmed close below support with volume.
Aggressive: Enter on breakdown candle or short at falling resistance line.
Above the falling resistance trendline, or above the most recent lower high within the pattern.
Measured Move: Height of the triangle projected downward from breakdown point.
Typically 1:2 or better depending on where you enter relative to the falling resistance.
The descending triangle is most reliable as a continuation pattern within an existing downtrend. Context determines whether to trade aggressively or wait for confirmation.
Volume typically contracts as the pattern develops. A breakout on heavy volume confirms the move - light volume breakouts often fail.
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