TA School

Descending Triangle

Master the classic bearish continuation pattern that signals seller dominance through falling resistance trendlines.

intermediate level9 min read

Interactive Model

Interactive Visual Walkthrough

Descending Triangle Continuation

Step 1 of 4
Flat Support Floor

Price repeatedly declines to a flat support floor at $98. Each time it hits this zone, buyers step in to defend it.

Why it matters: This horizontal support represents a demand wall where a large buyer or group of buyers is purchasing shares.

What is a Descending Triangle?

The Descending Triangle is a popular bearish continuation pattern that forms during an established downtrendDowntrendA market direction characterized by a sequence of lower highs and lower lows.Read full glossary entry →. It represents a period of consolidation where selling pressure is steadily building against a specific level of supportSupportA price level where buying pressure is strong enough to prevent the price from falling further. It represents a "floor" on the chart.Read full glossary entry →.

Pattern Structure

The structure is defined by:

  1. Flat SupportSupportA price level where buying pressure is strong enough to prevent the price from falling further. It represents a "floor" on the chart.Read full glossary entry → Line: A horizontal line connecting at least two troughs at a similar price level.
  2. Falling ResistanceResistanceA price level where selling pressure is strong enough to prevent the price from rising further. It represents a "ceiling" on the chart.Read full glossary entry → Line: A descending trendlineTrendlineA bounding line drawn across a chart to connect swing lows in an uptrend or swing highs in a downtrend, acting as dynamic support or resistance.Read full glossary entry → connecting two or more lower highs.
  3. The Apex: The point where the two trendlines converge.

Psychology Behind the Pattern

  • Demand Floor: The flat support line shows that a buyer or group of buyers is purchasing a significant amount of shares at a fixed price.
  • Aggressive Sellers: Sellers step in earlier and earlier on each bounce, creating lower highs.
  • The Breakdown: As the pattern nears the apex, sellers overwhelm the demand at support, trigger long stops, and breakdown to the downside.

Identification Rules

  • DowntrendDowntrendA market direction characterized by a sequence of lower highs and lower lows.Read full glossary entry →: A clear prior downtrend must be present.
  • Two Highs & Lows: Must have at least two touches of the flat support and two touches of the falling resistanceResistanceA price level where selling pressure is strong enough to prevent the price from rising further. It represents a "ceiling" on the chart.Read full glossary entry →.
  • Breakdown: Price must break and close below support on high volumeVolumeThe total number of shares, contracts, or units of a security traded during a specified time period.Read full glossary entry →.

Trading Setup

  • Entry: Sell short when a candle closes below the flat support line.
  • Stop-Loss: Place above the falling trendlineTrendlineA bounding line drawn across a chart to connect swing lows in an uptrend or swing highs in a downtrend, acting as dynamic support or resistance.Read full glossary entry → or the last minor high.
  • Target: Subtract the max height of the triangle from the breakdown price.

Key Takeaways

  • •The Descending Triangle is a bearish continuation pattern characterized by a flat support line and a falling resistance line.
  • •It shows that sellers are becoming increasingly aggressive, selling at lower highs.
  • •The pattern is confirmed when the price breaks and closes below the flat support line.
  • •Volume typically contracts as the pattern forms and expands during the breakdown.
  • •The profit target is projected by subtracting the widest height of the triangle from the breakdown point.
Knowledge CheckQuestion 1 of 5

What type of pattern is the Descending Triangle?

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