The descending triangle is a price-chart pattern defined by a downward-sloping trendline that connects lower highs and a relatively flat horizontal support line. As price action narrows within the triangle, a break below the support line is typically watched as a possible continuation of the prior price decline. The pattern can form on any market and time frame.
Traders look for a breakout through the horizontal support as a potential signal that the prior down move might continue. Some use a measured-move approach, estimating the potential length of the move by projecting the vertical distance between the highest high within the pattern and the support line from the breakout point. Volume can provide additional clues, with a rise on the breakout sometimes reinforcing the move, while low volume during formation is common. The pattern is commonly observed on stocks, futures, and forex charts and is one of several triangle patterns that describe price compression.
Descending triangles do not guarantee outcomes; false breakouts happen, and the pattern’s reliability varies by asset, timeframe, and accompanying price action. Like other chart patterns, its usefulness depends on how it is integrated with other analysis and the overall market context.
Example: On a daily chart, ABC Inc. forms lower highs while prices repeatedly test a flat support near $25. After a break below $25, the pattern is observed in the context of a prior price decline.
Triangle pattern · Support · Resistance · Trendline · Breakout · Measured move · Continuation pattern