Updated on March 14, 2023
The Descending Triangle is a bearish technical analysis pattern. It is formed when the price of a security moves in a downward direction. It is bound by a horizontal support level and a downward-sloping trendline which ultimately connects the series of lower highs. This pattern is seen when the price of a stock is characterized by a series of lower highs and a flat lower support level.
How to interpret the descending triangle pattern?
The Descending Triangle is considered a bearish pattern. This pattern indicates that the stock is losing upward momentum and that downward pressure may be building. Most traders use this Pattern as a potential sell signal as they expect that the price of the stock will eventually break down through the support level and continue to decline.