Descending Triangle Pattern: What It Is & How to Use It for Crypto Trading

Triangle patterns are widely recognized technical analysis chart formations that provide valuable insights into future price movements. There are three basic triangle consolidation patterns: the symmetrical triangle, ascending triangle and descending triangle. Traders pay close attention to descending triangles, as they often precede significant price breakdowns, presenting opportunities for profitable short trades.

Key Takeaways:

• The descending triangle pattern is a bearish chart formation used in technical analysis to identify potential downward price movements.

• Traders use the descending triangle pattern to identify potential short-selling opportunities and to set stop-loss orders to manage risk.

• The descending triangle pattern should be used in conjunction with other technical indicators and fundamental analysis to make well-informed trading decisions.

What Is a Descending Triangle?

A descending triangle is a bearish trend continuation pattern primarily sought in downtrends. This pattern is formed during consolidation, when the price of a cryptocurrency creates a series of lower highs in an upper descending trend line, while a horizontal support level acts as a floor, creating a triangular shape.