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Descending Triangle: Forex Chart Pattern

Descending Triangle Definition

The Descending triangle is a trend continuation pattern typically formed in a downtrend that serves for existing direction confirmation.
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Formation

The Descending triangle is represented by a narrowing price range between high and low prices, visually forming a triangle. The main distinctive feature of this type of triangles is that it generally has a descending trendline ( resistance) connecting lower and lower highs and a horizontal trendline (support) connecting the low points at approximattely the same level.

Descending Triangle Pattern
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Interpretation of Descending Triangle

When the price breaks below the support line (plus certain deviation is possible), usually somewhere between halfway and three-quarters of the way through the pattern, a sell signal is received.

Target price

Following a descending triangle pattern formation the price is generally believed to fall at least to its target level, calculated as follows:

T = S – H,

		Where:
		

T – target price;

S – support (horizontal line);

H – pattern’s height (distance between support and resistance lines at pattern’s origin).

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