What is Descending Triangle Pattern?

The descending triangle pattern is a technical tool to analyse price movements of assets. It generally forms when indices, stocks and other assets create a flat line of support at the bottom and record lower highs. This leads to a contracting price of assets. About 10.7 crores Indians are actively trading in 2025, and if you want to make an optimised gain from trades, read this blog.

Decoding the Meaning of a Descending Triangle Pattern

Did you know that about 20% of total market traders in India possibly make profits from the stock market in a trading day? This is because of the unprecedented price movement of assets. Thus, a descending triangle chart pattern might be helpful.

The descending triangle is a bearish continuation pattern that forms when an asset’s price creates a series of lower highs while repeatedly testing a strong support level. This indicates that sellers are gaining control, consistently pushing prices lower, while buyers attempt to hold the price steady. Such a setup often signals growing selling pressure and the possibility of a market breakdown.

For instance, if your preferred stock is trending downward and finding support at INR 500, yet continues forming lower highs, it suggests weakening buyer momentum. When the price eventually falls below INR 500, it confirms a bearish breakout, signalling a potential downtrend.

Strategy to do a Descending Triangle Pattern Trading

As it is a signal of bearish continuation, you can follow this 4-step strategy as a trader. It might help in carefully executing a trade when you identify a descending triangle chart pattern:

1. Potential Entry Point Post the Breakout

   The potentially effective entry is when the asset price breaks below the horizontal line. A conservative trader might wait for a candle to close below it. An aggressive trader might enter when a breakout happens. Suppose a stock falls below INR 500, then conservative ones wait for it to close under the price. Aggressive traders might act immediately.

2. Set a Stop-Loss Level

   When trading using the descending triangle pattern, setting a stop-loss beyond a recent price swing or above the trendline might be effective. This is because a stop loss might protect you from false breakouts where the asset price quickly returns to the triangle.

3. Target Price Calculation

   You can estimate the potential target price by measuring the height of the triangle at its widest point. It is typically the distance between the initial high and support. Then you must deduct this height from the point of breakout to forecast a potential downward move.

4. Employ Confirmation Tools

   If you rely on the descending triangle pattern, it might increase the risks. Therefore, traders often resort to indicators such as RSI, tools such as volume spikes, moving averages, etc. For instance, a breakdown with RSI moving below 50 and high volume might be seen as a stronger confirmation for a genuine price movement.

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Benefits of Descending Triangle Pattern

Now that you have an idea of the descending triangle chart pattern and how to strategise while trading with it, here are some advantages of it:

• Suppose the price of the stock you are observing ultimately breaks out and moves downwards from INR 500. It might lower to INR 450, and a descending triangle makes this identification easier due to its easily identifiable pattern.
• The defined support level of this chart also helps manage risks for traders. Due to the support line or level, you might be able to identify the price point where you should place the stop loss to reduce the chances of losses.
• Such a pattern might become helpful for traders to open either a short or a long position once they verify the falling pattern.
• Limitations of the Descending Triangle Pattern

Chances of false breakouts, misinterpretation, and reversal are some limiting factors of a descending triangle pattern:

• With descending patterns come the possibility of false breakouts. It might result in losses for traders following its trend. Suppose a stock breaks below INR 500 but quickly moves back above 505. Thus, traders who sold at INR 500 may incur losses.
• During a market situation where the volatility is higher than average, traders might interpret the movement incorrectly. This also leads to losses for traders.
• Sometimes a descending triangle might show a potential reversal. Thus, instead of confirmation of a downward trend, it increases the uncertainty of the price movement.

Conclusion

You can choose a descending triangle pattern for estimating the price movement of a certain asset or stock prices. Such a pattern usually shows a bearish movement of stock prices, and with a proper strategy, you must trade during this movement.

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FAQs on Descending Triangle Pattern

1. What is the success rate of the descending triangle pattern?

While there is no fixed success rate, with this pattern, there is a chance of achieving 75% odds of success.

2. Does a descending triangle pattern occur across different time frames?

Yes, such a pattern might occur during day trading, daily and weekly trading charts.

3. When does a descending triangle pattern become more reliable?

Reliability of this type of pattern might vary with time. Typically, for long-term patterns, it might be more reliable.

4. Are descending wedges and descending triangles the same?

No, a descending wedge usually narrows with resistance and support which slopes downwards, indicating a bullish movement. A descending chart usually indicates a bearish move.