What it looks like
At least two lows at about the same level form a flat floor. Above it, each bounce stops lower than the last, so a falling line can be drawn through the highs. The range narrows towards the floor. The pattern completes on a close below the floor. The height is measured at the widest part, from the first high down to the floor.
What it means
Sellers kept accepting lower prices on every bounce while one level held price up. Each lower high shows sellers growing more eager, and the buyers at the floor are being worn down. When price closes below the floor, that support has gone and the stops beneath it can speed the fall.
How to trade it
- 1
Draw the flat floor and the falling line of highs.
- 2
Confirmation: a candle closes below the floor.
- 3
Entry: sell at that close.
- 4
Stop: above the last swing high inside the triangle. Example on US30: floor at 46,800, highs at 47,100, 47,000 and 46,920, close below at 46,780. Sell at 46,780, stop at 46,935, a 155 point risk.
- 5
Target: the widest height (300 points) below the break, about 46,500.
A close back inside the triangle.
Where it works best
In a downtrend on 15 minute to daily charts, where the triangle is a pause before the next leg lower.
WickSpeak finds descending triangle breakdowns automatically and labels them on the candles that made them. Each note says what it is, how to trade it and that a close back inside the triangle proves it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Selling before the floor actually breaks.
- Drawing a floor through lows that are not level.
- Measuring the target from the narrow end of the triangle.
Related patterns
Questions traders ask
Is a descending triangle bearish?
Usually, because sellers are accepting lower prices on each bounce. It is confirmed only by a close below the flat floor.
How do you trade a descending triangle?
Sell the close below the floor with a stop above the last swing high inside the triangle. Target the widest height from the break.
What is the target of a descending triangle?
The height at the widest part, from the first high to the floor, measured down from the breakdown.
What proves it wrong?
A close back inside the triangle after the break. That shows the floor still has buyers behind it.