A descending triangle has a flat line along the bottom and a falling line across the top. Sellers keep selling at lower and lower prices while buyers defend the same floor. When that floor breaks, prices often fall quickly. It is the bearish mirror image of the ascending triangle.
What a descending triangle looks like
Draw a horizontal line under at least two lows that stop at roughly the same price. That is support. Then draw a falling trend line across at least two lower highs. The lines squeeze together into a triangle.
The flat bottom shows buyers are only willing to step in at one price. The falling highs show sellers getting more eager each time. Once the buyers at the floor are used up, the price drops through.
Descending triangles usually appear during a downtrend as a pause before the next fall. At the top of a long uptrend, the same shape can mark the start of a reversal.
How to confirm the pattern
- Two or more touches of the flat bottom and two or more lower highs.
- Falling volume while the triangle forms.
- A daily close below the flat bottom, ideally with a rise in volume.
- Once broken, the old floor often turns into resistance. Prices commonly come back to test it from underneath.
How to trade a descending triangle
- Entry: sell or go short on a close below the flat bottom, or wait for a retest of the broken floor from below. If you only buy shares, the pattern is a signal to avoid buying or to take profits.
- Stop: above the last lower high inside the triangle.
- Target: measure the height of the triangle at its widest point and subtract it from the breakdown price. A 50-point triangle that breaks at 1,000 points to roughly 950.
Short selling and spread betting can lose more than your stake if the price moves against you. Use a stop on every trade and size the position so a stopped-out trade is a small loss.
Mistakes to avoid
- Selling before the floor breaks. Support can hold many times.
- Fighting a strong uptrend. A descending triangle in a powerful uptrend fails more often.
- Using a stop that is too tight. The retest of the broken floor can poke back above it briefly.
- Forgetting news. Results days and big economic releases can blow straight through a pattern.
Related guides
This guide is for education only and is not financial advice. Trading carries risk; you can lose more than you expect.