Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Descending Triangle

What it is:

The descending triangle is a pattern observed in technical analysis. It is the bearish counterpart of the bullish ascending triangle pattern. The trendline connecting peak price levels should be downward sloping toward the horizontal trendline connecting the low price levels. 

How it works (Example):

If the upper trendline intersects the lower trendline, technicians expect downside momentum of the stock to grow stronger. The bottom trendline is also known as support

Why it Matters:

Many investors are skeptical of technical analysis and the traders who use it to make short-term profits, but the fact that so many traders observe these trends has caused them to have somewhat of a self-fulfilling effect. For this reason, a large proportion of traders take technical analysis into consideration when making investment decisions.