A descending triangle forms when the price creates lower highs, but the lows remain flat at a support level. This shows that sellers are gradually gaining strength.
The support level acts as a floor, but the down-sloping trendline reflects increasing selling pressure.
Implication:
A descending triangle is considered a bearish pattern, as it usually suggests that sellers will eventually overpower buyers, leading to a breakdown below the support level.
Trading Strategy:
Entry Point: Place a sell order below the support level, anticipating a breakdown.
Target: Measure the height of the triangle from the base to the support level and project it downward from the breakout point to set the price target.
Stop Loss: A stop-loss can be placed above the last lower high to protect against a false breakout.
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