DESCENDING TRIANGLE CHART PATTERN
- The Descending Triangle pattern is always a favorite setup for traders.
- The Descending Triangle pattern is a bearish continuation chart pattern as well as a bearish reversal chart pattern.
- It depends on the previous trend of the market.
- If a Descending Triangle pattern formed and the previous trend of the market is down, this pattern is called a bearish continuation descending triangle.
- And, If a Descending Triangle pattern is formed and the previous trend of the market is up, this pattern is called a bearish reversal descending triangle.
• When is Descending Triangle pattern formed ?
- Consider points A, B, C and D in the image, where the buyers are activated.
- And points E, F & G where the sellers are activated.
- If we connect points A, B, C and D, it formed a horizontal trendline (support).
- And if we connect points E, F and G, it formed a falling trendline.
- That means buyers are getting weaker and swing highs are shifting to the downside.
- This pattern is more reliable, if the price touches the horizontal trendline (support) more than three times.
- The breakout of descending triangle pattern is confirmed when price break the pattern with volume.
• Entry :
- Take entry when price breakdown the horizontal trendline. (support)
• Stop Loss :
- SL should be placed above the previous swing or above the breakdown candle.
• Target :
- Target should be equal to the distance between the horizontal trendline and the first swing high of this pattern.
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