Now let’s take a look at a descending triangle.
As you probably guessed, descending triangles are the exact opposite of ascending triangles.
In descending triangle chart patterns, there is a string of lower highs that forms the upper line.
The lower line is a support level in which the price cannot seem to break.
In the chart above, you can see that the price is gradually making lower highs.
This tells us that the sellers are starting to gain some ground against the buyers.
Now most of the time, and we do say MOST, the price will eventually break the support line and continue to fall.
However, in some cases, the support line will be too strong, and the price will bounce off of it and make a strong move up.
The good news is that we don’t care where the price goes. We just know that it’s about to go somewhere.
In this case, we would place entry orders above the upper line (the lower highs) and below the support line.
In this case, the price ended up breaking above the top of the triangle pattern.
After the upside breakout, it proceeded to surge higher, by around the same vertical distance as the height of the triangle.
Placing an entry order above the top of the triangle and going for a target as high as the height of the formation would’ve yielded nice profits.
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