Descending Triangle Pattern: A Bearish Signal Every Trader Should Know

Irion Dekov
May 14
4 min read

Updated: Jun 11

Chart pattern recognition is one of the most powerful tools a trader should have. These patterns visually represent the ongoing battle between buyers and sellers, allowing traders to anticipate future moves and strategically enter or exit positions.

Among these, the Descending Triangle is a vital bearish pattern that every trader should understand. It not only signals potential price continuation to the downside but also reveals deeper market psychology at play.

Let’s dive into this key chart pattern and learn how to identify and trade it confidently.

What Is a Descending Triangle Pattern?

A descending triangle is a bearish technical chart pattern formed when price creates a series of lower highs against a flat horizontal support level. The upper trendline slopes downward while the lower trendline stays relatively flat—forming that triangle that "squeezes" price into a narrowing range.

As this pattern progresses, volume typically diminishes, reflecting reduced conviction from both sides. The pattern resolves with a breakdown below support, often on increased volume which confirms the bearish outlook.

Visual Of Descending Triangle Pattern – source = Descending Triangle for BINANCE:LENDBTC by Demoniaco

Stock chart with a downward trend line. Red, purple rectangles on the right. Background grid with dark theme. Mood appears declining.

You can spot this bearish pattern because of the following characteristics. Horizontal Support which shows consistent buying interest at a specific level. Descending Resistance showing lower highs, indicating seller strength. Converging Price Action which builds pressure and tension before a likely breakdown. Volume Behaviour which is decreasing volume during formation, then spiking on breakdown.

Psychology Behind the Pattern

It isn’t just a shape—it’s a window into market sentiment.

Here’s what happens sellers are stepping in sooner on each rally which creates lower highs. It then reflects growing bearish confidence and urgency to exit or short. Buyers meanwhile, repeatedly defend a support level.

They can’t push prices higher which reveals a weakening demand and doubt of a reversal. As pressure mounts, support breaches, this leads to a downside breakout. It is often confirmed by a volume spike. It’s behaviour shows how bearish sentiment overpowers bullish resistance which results in a downtrend continuation

How to Identify a Descending Triangle!

The descending triangle pattern is tradeable on any timeframe. To effectively identify a descending triangle pattern these are the ways to do it. Firstly, spot a downtrend. The pattern usually follows a downtrend but may also appear in sideways consolidation. Also context matters. Then draw the Horizontal Support Line, identifying at least two or more touches at the same support level.

Keep a lookout for lower highs connection with a descending trendline. Use a trendline to connect two or more declining peaks. This signals seller dominance. Make sure the trendline converge to form a clear triangle shape that indicated price action tightening. Finally monitor the volume, it should decrease during formation and spike on breakdown.

Helpful Tools!

Trend Line Tool: Draw descending resistance and flat support.
Triangle Drawing Tool: Aids visual confirmation of triangle shape.
Candlestick Chart: Help clearly spot swing highs and lows.

Entry and Exit Strategies

Now we ask ourselves: how do we trade this pattern?

For entries, when the price breaks below the support with volume confirmation. Although, cautiously conservative traders may wait for a retest or a candle close. The breakout is ideally confirmed by a strong bearish candle with an increase in volume. Aggressive traders may entre just before the breakout anticipating the next move, but this is an example of risk taking.

For exiting, a common stop-loss placement is used, it is just above the breakout candle- an exit strategy if the trade goes against you. Another strategy being, profit target estimation, basically using the triangle’s height to plan an exit when the trade hits your goal. Considering a descending triangle pattern has an increase in volume, this can help decide to stay in the trade or exit if the breakout looks weak.

Common Mistakes to Avoid

One frequent issue is false breakouts, where price appears to break support but lacks the volume to confirm the move. Try to always look for volume spikes or wait for a retest. Another mistake is misidentifying the trend context, descending triangles are typically bearish continuation patterns and should form during or after a downtrend.

Finally, incorrect trendline drawing can hurt your analysis. Ensure you're not forcing the pattern and that there are at least two clearly defined lower highs and two equal lows to validate the structure.

Real-World Examples

Lets take a look at some real world examples!

Example 1: U.S. Dollar / Canadian Dollar .1D.FXCM.Heikin Ashi – NOVEMBER 2017

REFERENCE PICTURE: Descending triangle. Forex for FX:USDCAD by Rogerplc28

Candlestick chart showing a descending triangle pattern with red and green bars. A breakout occurs after the pattern, reaching 1.08576.

Example 2: Apple Inc.15.NASDAQ – JUNE 2017

REFERENCE PICTURE: Descending Triangle for NASDAQ:AAPL by gihanet23

Stock chart showing bearish pennant pattern with a "point break" label. Grid background, candlestick bars in green and red, price at 152.63.

Conclusion

To conclude, the descending triangle is a powerful bearish continuation pattern, but it requires careful confirmation. Always verify breakouts with volume, draw clear trendlines, and ensure the pattern forms during a downtrend. Use proper risk management with realistic profit targets. With consistent practice and discipline, this pattern can become a reliable tool in your trading strategy.