Descending Triangle


The descending triangle is a bearsih continuation pattern. The pattern is formed by two converging lines. The first is a downward slant that which is resistance and the other is a horizontal support. To confirm the descending triangle , there must have oscillation between the two lines. Each line must be touched at least twice for validation.

Here is a graphic representation of an descending triangle:

Descending Triangle

The target price of the pattern is determined by its height from the base of the triangle that we carry over the breakpoint. Another technique is to draw a parallel to the support line of the descending triangle from the first contact point with the support

This pattern is difficult to classify. Indeed, the exit is bearish just over half the time. So this is a continuation pattern but may also be a reversal pattern symbolizing a buying accumulation zone. Bullish movements are also more important than downward movements.

Forex Statistiques

Here are some statistics about the descending triangle :

- In 54% of cases, there is a bearish breakout

- In 54% of cases, the target price is reached when the support is broken. However, when the bearish slant is broken, the percentage up to 84%.

- In 64% of cases, a pullback occur on the support

- More than half the time, when a breakout occurs from the bottom, the exit will be made by the top However, false breakouts by the top are rare with only 6%.

Forex Notes

- The exit often occurs at the 2/3 of the pattern. This is the output level that offers the best performance

- The target price of the pattern is normally reached before the end of the triangle

- False breaks give no indication on the true side of the exit.

- Avoid taking a position if the breakout occurs before the 2 / 3 of the pattern

 - Pullbacks are harmful for the performance of the pattern

Forex Trading Strategies

The classic strategy (1):
Entry: Take a short position at the breakout of the support
Stop: The stop is placed above the last highest
Target: Theoretical target of the pattern
Advantage: The target price is often reached (75% of cases)
Disadvantage: There is a lot of false breakouts

The classic strategy (2):
Entry: Take a long position at the breakout of the resistance
Stop: The stop is placed below the last lowest
Target: Theoretical target of the pattern
Advantage: The target price is often reached (84% of cases) and there are few false breakouts
Disadvantage: -

The agressive strategy :
Entry: Take a short position at the second contact point with the bearish slant
Stop: The stop is set above the last highest
Target: Return on the neckline and Theoretical target of the pattern
Advantage: The ratio Profit/Risk is high given the fact that the stop is close
Disadvantage: There are as much bearish and bullish breakouts

Descending Triangle



Forex Others Chart Patterns :

Chart patterns are at the basis of technical analysis. They are distinguished into three categories: Reversal Patterns Continuation Patterns Neutral Patterns. Chart patterns are formed on the charts of historical data of different pairs. They appear on all timeframes.

Reversal Patterns
Continuations Patterns
Neutral Patterns
biseau ascendant
Rising Wedge
canal baissier
canal horizontal
biseau descendant
Falling Wedge
canal haussier
v bottom
biseau elargissement ascendant
drapeau ascendant
v top
biseau elargissement descendant
drapeau descendant
 
diamant creux
elargissement symetrique sommet
diamant sommet
fanion
double bottom
rounding bottom
double top
rounding top
elargissement ascendant angle droit
tasse avec anse
elargissement descendant angle droit
triangle ascendant
elargissement symetrique creux
triangle descendant
epaule-tete-epaule - ete
triangle symetrique creux
ete inversé
triangle symetrique sommet
triple bottom
triple top