|Double Top||Double Bottom||Triple Top||Triple Bottom|
|Triangle||Head and Shoulder||Flag and Penant||Channel|
|Cup And Handle||Support By Daily Trendline|
Descending Triangles is an another popular chart pattern used by traders. It takes few weeks to few months for this type of pattern to formed Usually it occurred at a Downtrend Basics and it is a continuation pattern of high reliability. This pattern consist of four parts:
1. Lower Horizontal(flat) trend line: It forms the Support Basics and generally have at-least two points, more the better.
2. Upper descending(falling) trend line: It forms the Resistance Basics in the pattern and have atleast two points, more the better.
3. Base: It is the vertical line drawn between lower flat trendline, at which the pattern started to the trend line opposite to it. The value of base is used to keep the minimum target amount.
4. Apex: It is the point where lower horizontal line and upper descending line meets. Some traders used apex as the time in which the minimum targets is achieved.
Descending Triangle also known as bearish descending triangle as they are giving bearish signal with upper trend-lines is descending or falling towards the apex. This trend is formed when the stock is showing a good support at a downtrend and having a continuously lower and lower highs. This is simply because the struggle between the sellers and buyers is being slowly win by the sellers and giving a breakout where the support is broken giving traders a sell signal. Normally the breakout is seen before the apex is reached, almost after 2/3 length of the pattern is formed.
With the descending triangle pattern formation there is a reduction in the Volume, and at the breakout point there is an increase in the volume.Therefore one have to pay attention to the volume movement for further confirmation.
One can also calculate the Breakout range, or the minimum price target for the price movement which should occur after the triangle is completed. It is the same as the height of the triangle.
Again integrating this pattern with other technical indicators maximize the profit and increase the confidence in placing yourself at the right position of the market. Like Pattern formed at the oversold condition further strengthen the sell signal. Similarly one can incorporate studies of MACD, Bollinger etc., to further enhance the pattern reliability and finally the profit.
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