1. What is important in Descending Triangle Pattern?
Structure: It is formed by a horizontal support line at the bottom and a descending resistance line at the top, creating a triangle shape.
Bearish Signal: Traditionally, this is considered a bearish continuation pattern. It shows sellers pressing prices lower with lower highs, while buyers defend a fixed support level.
Breakout Point: The bearish confirmation comes when price breaks below the horizontal support line with strong volume.
Psychology: It reflects weakening buyer strength — sellers consistently push prices down, and once support breaks, momentum shifts firmly to the downside.
2. Who Invented or Used It First?
Historical Roots:
The Descending Triangle (bearish context) is part of classical chart patterns studied since the early 20th century.
Early Contributor / Analyst:
The pattern was first described in detail by Richard W. Schabacker
Among the earliest to document price formations and bearish continuation setups
Further Development & Standardization:
Robert D. Edwards and John Magee
Edwards and Magee
They classified Descending Triangle as a bearish continuation pattern
Later Analysts & Educators:
John J. Murphy
Expanded its use in modern trading education
No Single Inventor:
The pattern developed from repeated observation of falling highs pressing against a fixed support level, signaling increasing selling pressure.
3. Who Used It in Practice?
Jesse Livermore
Applied breakdown and trend-continuation strategies similar to this pattern
Paul Tudor Jones
Known for identifying bearish setups and capitalizing on market declines
Trading logic used:
Lower highs + strong support → Breakdown → Bearish continuation
4. How Much Did They Invest & Profit Using This Pattern?
Important Note:
There is no verified public data showing exact investment amounts or profits specifically from Descending Triangle trades. These patterns are used within broader trading systems.
Richard W. Schabacker
Focused on research and writing
No publicly available trading profit records
Jesse Livermore
Traded with large capital and made/lost millions of dollars
Used price breakdown strategies aligned with this pattern
Paul Tudor Jones
Built a multi-billion-dollar hedge fund
Profited from major market downturns using technical + macro analysis
John J. Murphy
Primarily an educator
Did not disclose specific trading profits
5. Key Insight
Descending Triangle (bearish) reflects:
- Strong selling pressure
- Weakening support level
Best confirmations:
- Breakdown below support
- Volume expansion on breakdown
6. Profitability & Use in Trading
Traders’ Success: Many traders have profited by recognizing descending triangles as reliable bearish continuation signals.
Institutions & Individuals: It became a staple in technical analysis, used to anticipate breakdowns and protect against downturns.
Profit Potential: When confirmed with volume, descending triangle breakdowns often lead to sharp declines, allowing traders to short or exit positions profitably.
7. Why It Became Famous?
Reliability: Considered one of the most dependable bearish continuation patterns.
Simplicity: Easy to spot visually — a flat support line and descending resistance line.
Educational Spread: Featured in nearly every technical analysis textbook and trading course.
Market Psychology: It captures the gradual erosion of bullish strength and the dominance of sellers.
Broad Application: Works across stocks, forex, commodities, and crypto, making it universally relevant.
Quick Recap
Key Idea: Signals bearish continuation after consolidation.
Origin: Documented by Schabacker and Edwards & Magee.
Profitability: Yes, widely used to capture breakdowns and avoid losses.
Fame: Reliability, simplicity, and strong psychological basis made it a cornerstone of chart analysis.
1. Pattern Overview
Pattern Type
Bearish Continuation Pattern
Professional Definition
The Descending Triangle is a bearish continuation chart pattern that forms during a downtrend or consolidation phase. It is defined by a horizontal support line and a descending resistance line. The pattern signals increasing selling pressure as lower highs are consistently formed, eventually leading to a breakdown below support.
Market Psychology
- Sellers dominate by pushing prices lower at each rally attempt.
- Buyers defend a fixed support level but fail to generate higher highs.
- The repeated rejection at descending resistance reflects weakening demand.
- A decisive breakdown below support confirms bearish sentiment and continuation of the downtrend.
Statistical Success Rate
Research from Thomas Bulkowski’s Encyclopedia of Chart Patterns shows that Descending Triangles break downward in 64–70% of cases, making them reliable bearish continuation signals.
Average Price Move After Breakout
The projected move is typically equal to the pattern height (distance between the first high and the support line). Average declines range from 10–20% depending on market conditions.
Ideal Market Conditions
- Strong prior downtrend
- Moderate volatility
- Momentum-driven environments with active selling pressure
Comparison With Similar Patterns
- Versus Ascending Triangle: Ascending Triangle has rising support, while Descending Triangle has falling resistance.
- Versus Symmetrical Triangle: Descending Triangle has a flat support line, while symmetrical triangles have converging sloping boundaries.
- Versus Falling Wedge: Falling Wedge slopes both boundaries downward, while Descending Triangle has one flat side.
2. Step-by-Step Formation Structure
Required Prior Trend
Typically forms after a downtrend or during bearish consolidation.
Stage-by-Stage Development
- Initial decline sets the stage.
- Price consolidates between horizontal support and descending resistance.
- Sellers push lower highs, while buyers defend support.
- Breakout below support completes the bearish scenario.
Support Level Formation
Support is established at repeated lows where buyers consistently defend price.
Resistance Level Formation
Resistance forms through descending highs, reflecting persistent selling pressure.
Trendline Drawing Rules
- Draw a horizontal line across troughs (support).
- Draw a descending line across peaks (resistance).
Minimum Pattern Requirements
- At least two touches on support and resistance.
- Clear descending slope on resistance line.
- Consolidation phase lasting several sessions or weeks.
Volume Behavior During Formation
- Volume contracts during consolidation.
- Breakout is accompanied by volume expansion.
3. Breakout Structure
Exact Breakout Location
Occurs when price closes below the horizontal support line.
Breakout Candle Characteristics
- Strong bearish body
- Close below support
- Preferably accompanied by high volume
Confirmation Rules
- Daily close below support
- Volume spike
- Follow-through in subsequent sessions
Volume Behavior During Breakout
Expansion confirms strong selling interest and validates breakout reliability.
Trader Signal Interpretation
Breakout signals bearish continuation and entry opportunity for short positions.
4. Trading Strategy & Mathematical Formulas
Entry Strategy
Aggressive Entry: Enter immediately after breakout confirmation.
Conservative Entry: Wait for retest of support (support becomes resistance).
Target Price Calculation
Pattern Height Formula
Pattern Height = Highest Peak − Support Level
Bearish Target Formula
Target Price = Breakout Level − Pattern Height
Stop-Loss Placement
Bearish Breakout: Above descending resistance or above retest high
Risk–Reward Ratio Formula
Risk–Reward Ratio =
Entry Price − Target Price
Stop Loss − Entry Price
Example Calculation
Entry Price = 95
Highest Peak = 105
Support Level = 98
Pattern Height = 7
Target Price = 88
Stop Loss = 100
Risk–Reward Ratio =
95 − 88
100 − 95
=
7
5
= 1.4 : 1
5. Volume Analysis Rules
- Volume contracts during triangle formation.
- Expansion at breakout confirms strength.
- Weak volume breakouts may indicate false signals.
- Sustained volume growth after breakout improves reliability.
6. Key Identification Features
- Horizontal support line at the bottom.
- Descending resistance line at the top.
- Multiple touches on both boundaries.
- Consolidation phase before breakout.
Typical Timeframes
- Frequently seen on intraday 15-min and 1-hour charts for short-term breakdowns.
- On daily charts, descending triangles often appear during continuation phases in strong downtrends.
- On weekly charts, they can mark prolonged distribution zones before major bearish moves.
Bearish Nature
The pattern signals persistent selling pressure and continuation of bearish sentiment.
Market Conditions That Improve Reliability
Strong prior downtrend, contracting volume during formation, and decisive breakout candle.
7. Failure Conditions & Invalidation Rules
- False breakout with weak volume.
- Opposite breakout above descending resistance line.
- Early warning: support line slopes upward, weakening bearish bias.
- Invalidation if price sustains above resistance after breakdown attempt.
- Risk management: avoid trading in sideways or illiquid markets where false signals are common.
8. Common Trader Mistakes
- Entering short positions before support breakout confirmation.
- Confusing descending triangles with falling wedges.
- Ignoring volume contraction and expansion signals.
- Placing stop-loss too close to support, leading to premature exits.
- Assuming every descending triangle will break downward without confirmation.
9. Chart Description
The Descending Triangle in bearish scenario begins with a downtrend. Price consolidates between a horizontal support line and a descending resistance line. Each peak is lower than the previous one, while support remains firm. Volume contracts during consolidation. A breakout candle closes below the support line with strong volume. Traders project the target by subtracting the pattern height from the breakout level. Volume expansion confirms the breakout’s reliability.