The descending triangle is the opposite of the ascending triangle and is considered to be a bearish continuation chart pattern in a strong down trending currency market. The trading pattern is formed by two trend lines that converge.
In order to qualify as a descending triangle pattern, there must be at least two points of lower swing highs (resistance) and a horizontal line of support. The pattern is confirmed on a sustained break of the descending triangle. Descending triangles are considered less reliable in sideways markets. The pattern can be used in strong up trends as well.
Descending Triangle Trading Ideas
Conservative forex traders: wait for a sustained break out of the descending triangle to the downside.
Aggressive forex traders: buy in the vicinity of the descending resistance line. Look for overbought signals from RSI, stochastic,.. near the resistance line (lower highs) to enter a low risk – high reward forex trade.
Conservative forex traders: wait for a sustained break of the descending triangle to the upside.
Aggressive forex traders: buy in the vicinity of the horizontal support line.
Look for oversold signals from RSI, stochastic,.. Near the support line to enter a low risk – high reward trade.
USD/JPY 15 Min Chart Forex descending Triangle Example
