Chart Analysis and Chart Pattern Recognition – Descending Triangle Pattern |
The descending
triangle is a variation of a symmetrical triangle formation that has a flat support line and
a falling resistance line. The lower highs indicate the decreasing demand and
give the descending triangle definitive bearish bias. The descending triangle
usually represents a distribution stage in bearish market. The descending
triangle is considered as a continuation pattern, especially in a downtrend, but it
may also mark a reversal in an uptrend. Volume usually increases on trend support resistance breakout.
After breakout (similar to rectangle), support may turn into potential
resistance and vice versa.
Descending Triangle Screening page presents a list of stocks forming Descending Triangle Pattern.
Tips:
# 1 As a continuation pattern, descending triangle usually appears within
a young trend, characterized by neutral long-term indicators and oversold
short-term indicators. Descending triangle resets short-term indicators to
neutral and then continues the movement in parent's direction.
# 2 As a reversal formation, descending triangle appears in a mature uptrend,
characterized by overbought long-term and short-term indicators. This situation
usually generates bearish divergence on long-term indicators.
# 3 For the best results, chart patterns should be considered together with other technical analysis signals and technical trading techniques.
Estimated Target: the main trend support/resistance level. line. |
|