CHART PATTERNS—Descending triangles are a very popular chart pattern among traders because it clearly shows that the demand for an asset is weakening, and when the price breaks below the lower support, it is a clear cation that downside momentum is likely to continue or become stronger.
Descending triangles give technical traders the opportunity to make substantial profits over a brief period of time.
Most traders look to initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern. In general, the price target for the chart pattern is equal to the entry price minus the vertical height between the two trend lines at the time of the breakdown.
The upper trend line resistance also serves as a stop loss level for traders to limit their potential losses. A descending triangle is the bearish counterpart of an ascending triangle which is one of the most reliable bullish chart patterns used by technical analysts.
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