Understanding the Descending Triangle Chart Pattern

On the Internet, there are numerous chart patterns to choose from. Heads Shoulders, Widening Wedge, Bull Flag, Triple Bottom Top, Bull, Bear Pennant, Support Resistance, Consecutive Candles, Butterfly, ABCD, Up-Down Channel, Double Bottom Top, Rectangle, Big Move, Momentum, Gartley, 3 Extension dots, 3-point backspin, and many others are just a few examples. You will see these patterns on the Internet. Some just use photos to prove it. It is also difficult to discuss all of these patterns in one session. As a result, we will only cover one pattern in this article: the descending triangle chart pattern.

According to Investopedia, a descending triangle is a bearish chart pattern that is created by drawing a horizontal trend line connecting a series of lower highs and a second horizontal trend line connecting a series of lows. Traders often look for a move below the lower support trendline as it indicates that downward momentum is starting to build and a breakdown is approaching. Traders establish short positions and aggressively help push the price of the asset even lower if the crash occurs. You can access these trading positions on crypto trading platforms like bitcoin-pro.

When most traders hear the term descending triangle, they immediately think of a bear market. In some circumstances yes, but not in all. The descending triangle has the potential to be both bullish and bearish. Just because you see a descending triangle on a chart does not guarantee that the market is bearish. Also consider other aspects to confirm your hypothesis. When a descending triangle appears in a bull market zone, there is an 84 percent chance of a bullish breakout. There is a 61 percent chance of a downside breakout if a descending triangle forms in a bear market.

On the other hand, if you see and feel three descending triangles on a chart, two of them are potential breakouts to the downside and one is a breakout to the upside. It is also possible that there is no rupture. A descending triangle has a downward sloping top and a horizontal trend line at the bottom. The volume of the triangle recedes or decreases as it is formed. It appears to be calming down and strengthening in preparation for a drastic price tilt or decline.

On a descending triangle breakout to the upside, we can see on a chart that the price starts to break out of a price range in a specific period. The price breaks its recent pattern and goes up. At the same time, its volume decreases over time. As the breakout progresses, the volume also steadily increases. In a descending triangle, there are times when a circular or false saw breakout occurs. It happened to Bitcoin in 2017 during a bull market. Although there was a false breakout and many traders panicked, the price of Bitcoin continued to rise.

This pattern is just one of many chart patterns that traders study. It occurs in all time frames. This pattern is only intended as a guide. It has the potential to move up, down, or even sideways. Use other indicators to strengthen your guess before entering and exiting the trade. However, when using prompts, you should be cautious. If you use it too much, you can experience what is known as technical analysis paralysis. Traders are prone to overthinking in this situation. They are not sure what action to take because there are too many clues. This is because indicators give you forward and stop signals. Because indicators can send contradictory indications, it is essential to have a sufficient number of them.

For novice traders who do not want to experience this, they choose to consult professional crypto traders to help them make trading decisions. Bitcoin Pro is a place for those who are looking for competent brokers around the world. If you also want to test the waters first, you can give this platform a try. Because Bitcoin Pro recognizes the public’s growing desire to trade cryptocurrencies, they created a platform that integrates a suite of cutting-edge tools to help you achieve your trading goals.