Descending triangle breakout, Technical Analysis Scanner

Descending triangle breakout, Technical Analysis Scanner

descending triangle breakout
descending triangle breakout

Therefore, we like to go long in stocks and equities, since our trades will be supported by the long term bias of the market. A trader enters the trade on the long side, if the horizontal line is broken out on the upside. A descending triangle is a bearish chart formation that occurs during a downtrend and indicates that the existing trend is likely to continue. Commodity and historical index data provided by Pinnacle Data Corporation.

At the bottom, there is a solid floor of support that is tested at least 3-4 times. The support level is the bottom from where the price couldn’t push any lower. This pattern emerges when volume declines and new stock price highs are limited.

  • Traders should act in the direction of the breakout, once it occurs.
  • The original definition of a triangle does involve volume, but that doesn’t mean that you can’t impose additional conditions.
  • If you are just starting out on your trading journey it is essential to understand the basics of forex trading in our free New to Forex trading guide.
  • There is decent support of around INR 715 which is quite strong.

If both lines were extended right, the descending trend line could act as the hypotenuse of a right triangle. If a perpendicular line were drawn extending up from the left end of the horizontal line, a right triangle would form. Let’s examine each individual part of the pattern and then look at an example. For a Descending Triangle, X is defined as the distance between the highs and lows of the Descending Triangle chart pattern.

Ascending Triangle Pattern

As can be seen from the chart above, the stock’s movement had been contracting since September 2022 as it was going sideways. The support levels almost remained intact during this period but the resistance kept on coming down on account of lower peaks. The falling trendline is clearly representing the increasing selling pressure in the stock due to which every new peak was lower than the prior one. The descending triangle is fairly easy to spot once traders know what to look for.

The rally stalled just below 50 and a series of lower reaction highs began to form. The long-term trend was down and the resulting pattern was classified as a continuation. The Descending Triangle is one of the three triangle chart patterns out there.

descending triangle breakout

Mean Reversion Definition Reversion to the mean, or “mean reversion,” is just another way of describing a move in stock prices back to an average. There is no need to make use of volumes when trading with this strategy. Also note that you will not always see a bullish signal from the EMA’s prior to the breakout.

A measured move chart pattern is when you measure the distance and project the same from a breakout. Eventually, price action breaks out from the sloping trend line. Measure the distance from the horizontal support to the initial high and project this distance from the breakout level. After price bounces off the support level multiple times, posting lower highs, we can anticipate a potential downside breakout.

At the same time, price action forms a horizontal support level. Even though the descending triangle pattern and the falling wedge pattern have similar formations, they are different in meaning and outcome. The descending triangle is a chart pattern used in technical analysis. The pattern usually forms at the end of a downtrend but can also occur as a consolidation in an uptrend. A regular descending triangle pattern is commonly considered a bearish chart pattern with an established downtrend. A descending triangle pattern, however, may be bullish, with a breakout in the opposite direction, known as a reversal pattern.

Symmetrical triangle breakout strategy backtest

Descending triangles and ascending triangles are opposites. Falling volume can indicate that longs are taking profits. StocksToTrade’s top-of-the-line stock screener can help you spot this pattern.

When trading the descending triangle pattern, we’re always looking for the support breakout to give us a potential entry point. Unlike the textbook saying that teaches retail traders that a support or resistance level gets stronger if we have multiple retests; contrary to that the reverse is true. This simple chart pattern can be spotted on long-term charts and short-term charts. It doesn’t matter what your trading style is; whether you are a swing trader or day trader. Anyone can use the technical analysis descending triangle to spot profitable trading opportunities. The triangle breakout strategy aims to trade into a trend continuation following a price breakout from a triangle consolidation pattern.

Another technique that’s used by quite some traders is to not act on the initial breakout, but wait for the market to return to the breakout level. Then, as soon as it becomes apparent that the breakout level remains respected, they enter the market. Having had a look at the definition of the descending triangle pattern, we’ll now move on to discussing some trading setups.

This stock is making lower highs with same low level on daily chart by forming a Descending triangle, breaking 2000 level will open the downside upto 1800 level. It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career. We don’t care what your motivation is to get training in the stock market. If it’s money and wealth for material things, money to travel and build memories, or paying for your child’s education, it’s all good.

descending triangle breakout

The below method can be applied to all financial markets as well as forex. The descending channel pattern is a bearish chart formation. It develops within pronounced downtrends in asset pricing. Traders view descending channels as descending triangle breakout evidence of weakened strength in the counter currency. Accordingly, it is frequently used to sell a currency pair and join the prevailing market downtrend. KPR mill breaks out of the Descending triangle pattern on weekly chart.

A descending triangle is a bearish price pattern that occurs in a downtrend, and signals that the bearish trend will persist. Still, in some cases, a descending triangle may appear as a reversal pattern at the end of a bullish trend. Nevertheless, it remains a bearish pattern regardless of the previous direction of the trend. Like any support/resistance or trendline breakout/breakdown, volume plays a very important part in confirming the strength of an ascending triangle breakout/breakdown. The breakout in an ascending triangle can occur to the upside or downside.

What is the Descending Triangle Candlestick Pattern?

Add in our news feeds, social media feeds, indicators, and so much more … There’s a lot to love about this platform. No pattern works every time, so you have to manage your risk. You can do that by setting a stop loss on every trade you take. If the reversal is strong enough, it leads to a break of resistance. Any more than three red candles of price going down, and I’d say you have a bearish trend forming. Longs are also less concerned with the lower highs that form as long as support holds.

The more often that the price touches the support and resistance levels, the more reliable the chart pattern. Traders can combine price techniques, like the moving average, and chart patterns with technical indicators. In this strategy, traders use the descending triangle pattern to anticipate potential breakouts, and the moving average indicators trigger the signal to initiate a trade. You can identify the descending triangle reversal pattern at the top end of a rally. This pattern emerges as volume declines and the stock fails to make fresh highs. The pattern indicates that the bullish momentum is exhausting.


There will be times when the market doesn’t re-test the breakout point. Once the market has “confirmed” your bias, you can go short on the next candle open and have your stop loss 1 ATR above the swing high. Because as the price drops lower, there’s still a lack of buying pressure. Instead, sellers are willing to sell at even lower prices (that’s why you get a series of lower highs). And if traded correctly, it allows you to catch explosive breakout trades about to occur .

Sometimes the market will gap right past the breakout level, which makes it impossible to enter at that level. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.Only English comments will be allowed. Don’t Monopolize the Conversation.We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.

So, wait for the price to “confirm” your bias before shorting the markets after a retest of the descending triangle pattern. Triangle is a classic price action pattern that is applied by technical analysts to make predictions trading different financial markets. Depending on the shape of the triangle, there are three main variations of this pattern. Its meaning changes dramatically from one to another so it is crucially important for you to know the difference.