Descending Triangle
Bearish (bilateral) IntermediateFlat support with declining resistance — each high is lower than the last, showing sellers becoming more aggressive until support breaks.
Quick Summary
- •What it looks like: Horizontal support at the bottom (flat line) and declining resistance at the top (downward-sloping line), forming a triangle that tightens to the right.
- •What it means: Sellers are getting more aggressive with each rally, creating lower highs. Buyers defend a specific price level (support), but their defense is weakening.
- •When it confirms: Price breaks below the flat support line with strong volume. While technically bilateral, these usually break downward (60-70%).
What It Looks Like
Lower Highs Signal Weakness
Each rally creates a lower high than the previous one, showing sellers are willing to accept increasingly lower prices. This is distribution in action.
Support Becomes Resistance
After the downward breakdown, the old support level often becomes new resistance. This is a good spot for short entries if price rallies back to test it.
The Story Behind the Pattern
1
Price Bounces Off Support
The stock declines and finds a floor where buyers step in. This creates a horizontal support line as price repeatedly tests this level but holds initially. Buyers are defending a specific price.
2
Lower Highs Form
After each bounce from support, price rallies but doesn't climb as high as before. Each high is lower than the last, creating a downward-sloping resistance line. Sellers are becoming more aggressive.
3
Pressure Builds on Support
As the pattern develops, the space between support and resistance narrows. The triangle compresses, with price repeatedly testing the same support level. Each test weakens the support as sellers gain confidence.
4
Breakdown Below Support
Eventually, sellers overpower buyers and push through support on strong volume. The lower highs showed distribution was happening — the breakdown is the payoff. Most descending triangles break downward (60-70%).
How to Trade Descending Triangle
1
Sell Below Support
Enter short when price closes below the horizontal support line. Conservative traders wait for confirmation; aggressive traders enter as support is tested repeatedly, anticipating the break.
2
Target = Triangle Height Projected Down
Measure the vertical distance from the flat support to the first high (widest part of the triangle). Subtract this height from the breakdown level to get your downside price target.
3
Volume Increases on Breakdown
Volume typically contracts during the triangle, then surges on the breakdown. This spike confirms the move is real. Low-volume breakdowns often result in false moves and whipsaws.
4
Can Go Either Way, But Usually Down
While technically bilateral, studies show 60-70% break downward. The lower highs indicate selling pressure is building, making a breakdown more probable than a breakout. Still, wait for confirmation.
Technical Details
| Pattern Name | Descending Triangle |
| Pattern Type | Bilateral (but typically bearish, 60-70% downward breakdown rate) |
| Formation | Flat horizontal support + declining resistance (lower highs) |
| Confirmation | Breakdown below support (or breakout above resistance) with volume |
| Price Target | Triangle height (widest point) subtracted from breakdown level |
| Timeframe | Typically 1-3 months, minimum 3-4 weeks |
| Reliability | High (70-75%) for downward breakdowns when volume confirms |
| Volume | Decreases during formation, expands significantly on breakdown |
Remember: While descending triangles are statistically bearish, 30-40% DO break upward. Never assume direction without confirmation. Also, support that has been tested many times can become "stale" and is more likely to break — the more touches, the weaker it becomes.
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