A descending triangle is a bearish chart pattern used in technical analysis to predict a potential downward price movement. It's formed by drawing two converging trend lines:
1. A descending resistance line (upper line)
2. A horizontal or slightly sloping support line (lower line)
The pattern appears as a triangle, with the price action contracting and consolidating between the two lines. Here are some key characteristics:
1. The upper line connects a series of lower highs
2. The lower line connects a series of equal lows or slightly lower lows
3. The price action is contained within the triangle
A descending triangle can be a powerful signal, but it's essential to combine it with other forms of analysis and risk management techniques to ensure a well-informed trading decision.
1. A descending resistance line (upper line)
2. A horizontal or slightly sloping support line (lower line)
The pattern appears as a triangle, with the price action contracting and consolidating between the two lines. Here are some key characteristics:
1. The upper line connects a series of lower highs
2. The lower line connects a series of equal lows or slightly lower lows
3. The price action is contained within the triangle
A descending triangle can be a powerful signal, but it's essential to combine it with other forms of analysis and risk management techniques to ensure a well-informed trading decision.