how to trade a descending triangle
traders often initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern in general the price target for the chart pattern is equal to the entry price minus the vertical height between the two trend lines at the time of the breakdown the upper trend line resistance also serves as a stop loss level for traders to limit their potential losses traders often choose the simplest way to use the descending triangle pattern and buy the breakout of the triangle and it is one of several common strategies to take profits using this pattern 1this strategy anticipates a breakout from the descending triangle pattern and uses a combination of trading volumes and asserting the trend to capture short term profits when a stock is in a downtrend or a consolidation phase traders watch for lower highs and lower lows being formed heikin ashi charts can apply to any market and are a trading tool used in conjunction with technical analysis to assist in identifying trends the heikin ashi candlesticks turn bullish before the breakout 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 traders can combine price techniques like the moving average and chart patterns with technical indicators in this strategy traders use the descending triangle pattern to anticipate potential breakouts and the moving average indicators trigger the signal to initiate a trade this pattern emerges when volume declines and new stock price highs are limited the pattern indicates that the bullish phase is ending the trading period begins when the descending triangle reversal pattern is revealed ahead of the breakout 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 descending triangles vs ascending trianglesboth the ascending and descending triangle are continuation patterns the descending triangle has a horizontal lower trend line and a descending upper trend line the ascending triangle has a horizontal trend line on the highs and a rising trend line on the lows triangles reveal an opportunity to short and suggest a profit target so both triangles are just different takes on a potential breakdown ascending triangles can also form at the reversal of a downtrend but are more commonly viewed as a bullish continuation pattern the limitations of a descending trianglesince no chart pattern is perfect and analysis is often subjective using descending triangles has limitations a false breakdown may occur or trend lines may need to be redrawn if the price action breaks out in the opposite direction if a breakdown doesn t occur the stock could rebound to re test the upper trend line resistance before making another move lower to re test lower trend line support levels the more often that the price touches the support and resistance levels the more reliable the chart pattern 