Lesson #46 What are Descending Triangles? What Trend Could Market Follow After This Situation?

Descending triangles are exactly opposite of the ascending triangles. Here the lowest price line is a straight support line. This line shows the lowest prices. Here you will notice that the line of lowest price falls is coming towards the support line and forming a triangle.

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As shows in the figure above, you can clearly see a fall in the prices, and the slope is coming downwards to meet the lowest price level. In this case too, there will be a point where the prices will break either for a rise or for a fall where the sellers win than buyers.

Descending triangle situation is unpredictable, if the lowest price line is strong enough, there are chances that the lowest price falls line will not be strong enough to break it, this will end up in the line bouncing off and it will result into price rise and buyers will win. However, it could also result into the price fall and the sellers will win.

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As shown in the graph above, the base line or the support line was not strong enough, therefore, when the break point happens, the prices began to fall drastically. Here, sellers with short term investments tend to win the battle.

During trading you need to be prepared when descending triangle happens for both situations, the fall of prices and the bouncing back of prices. So, you should place entry orders above the descending line of the graph and below the base line or the support line as shown in the graph. You can make a definite move after the break happens.