These have a sloping trend line and flat support. A descending pattern is a bearish continuation pattern that shows how prices will continue to fall strongly after the completion of the pattern. Price bounces up and down between the triangle lines of support and resistance forming lower highs while maintaining the lows. This shows a bearish bias.
The break and close of the candle below the support line gives a confirmation sell signal for a continuation in the down-trend.
Take a look at the illustration below;
For a sell confirmation on a descending triangle, it must be in a downtrend. Like we mentioned before, the pattern is complete when the breaking candle closes below the lower side of the triangle. This is the confirmation for Sell entry. The Profit target is got by measuring the height of triangle at formation and projecting that same distance forward. Stop loss is set slightly above the upper level of the pattern for a sell position.
Let’s look at a practical way trading the Descending triangle pattern on a price chart.
Below is EURAUD, 4-Hour chart with the pattern
From the above EURAUD, 4-Hour chart, the confirmation for a sell signal for continuation is the break and close of the candle below the support line as shown.
So the Profit target is got by measuring the height of pattern (H) at formation and projecting that same distance (H) downwards as shown in the chart above. Stop loss is set slightly above the upper level of the pattern.
How long you should hold an open position, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer, this...
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