Descending Triangle: Forex Chart Pattern

Formation

The Descending triangle is represented by a narrowing price range between high and low prices, visually forming a triangle. The main distinctive feature of this type of triangles is that it generally has a descending trendline ( resistance) connecting lower and lower highs and a horizontal trendline (support) connecting the low points at approximattely the same level.

Interpretation of Descending Triangle

When the price breaks below the support line (plus certain deviation is possible), usually somewhere between halfway and three-quarters of the way through the pattern, a sell signal is received.

Target price

Following a descending triangle pattern formation the price is generally believed to fall at least to its target level, calculated as follows:

T = S – H,

		Where:
		
T – target price;
S – support (horizontal line);
H – pattern’s height (distance between support and resistance lines at pattern’s origin).