Descending Triangle Bullish is a pattern that will appear when the price bounces off the support level at least twice. This Descending Triangle Bullish can appear at any time when you are trading forex. To learn more, you can read more through the article below. In addition, you can read the article.

Table of Contents


What Is Descending Triangle Bullish

The classic version of this pattern is formed with a sloping trendline and a flat or horizontal support line. The pattern appears when the price bounces off the support level at least twice. The pattern is completed after the end of the retracement in the downtrend. A downside breakout of the support triggers a strong decline led by bearish momentum. However, this textbook pattern rarely occurs in the real market. In most cases, the descending triangle pattern can also see a sloping bottom. Instead of a flat support level, you can see higher lows forming. The illustration below shows what an “ideal” descending triangle pattern, also often referred to as a descending wedge, looks like.



Characteristics of the Bullish Descending Triangle Pattern

Ascending triangle comes with some important features that traders and investors can use to identify it easily. The features usually apply to financial markets and foreign exchange markets. pasar valuta asing.
  1. Downtrend : The market in question must be in an existing downtrend before the descending triangle pattern appears.
  2. Consolidation Phase : Descending triangle appears when the market enters a consolidation phase.
  3. Descending Upper Trendline : Building on the second point, a downward sloping trend line can be drawn by connecting the upper points and shows that sellers are gradually pulling the price down.
  4. Horizontal Bottom Trendline : The lower horizontal trendline primarily acts as support, and price often approaches this level until a breakout occurs.
  5. Downtrend Continues : Occurs after a break below the lower trendline.

Requirements for a Bullish Descending Triangle

Here are the conditions that can be said that the pattern is a descending bullish triangle pattern. These conditions are:
  1. The most frequent exits occur at 2/3 of the triangle length. This exit level offers the best performance.
  2. The price target of a descending triangle is generally obtained before the tip of the triangle (the intersection of the two lines that form the triangle).
  3. False breaks do not provide any indication of the true exit direction.
  4. Avoid taking positions if the break/exit occurs before 2/3 of the triangle's length.
  5. Pullback resistance at the descending triangle support line is detrimental to performance.

Example of a Bullish Descending Triangle

We said earlier that descending triangles usually occur in the middle of a trend, as they help extend a downtrend. In the chart below, EUR/USD is trading steadily lower. You see that after a series of lower lows, price action makes two equal lows, allowing a supporting trendline to be drawn.

However, sellers did not allow buyers to break through the series of lower highs, which continued until the two trendlines approached an intersection. Just before this happened, sellers managed to break through the triangle downwards, thereby securing the continuation of the downtrend.



Finding a descending triangle is very easy and simple. The first step should be associated with identifying a downtrend. After that, you should look for at least two equal, or close to equal, lows which helps draw a flat support line, while the opposite trendline should extend lower to reflect lower highs.

It is important to note that the lower trendline is not always completely flat, as it is difficult to expect the exact level of a volatile market. As long as the lower trendline is almost flat, we consider it valid. A break of this line marks the activation of the descending triangle pattern and the moment when we consider entering the market to take advantage of the next move lower.

Bullish Descending Triangle Type

Descending Triangle Continuation

Both ascending and descending triangles are continuation patterns. An ascending triangle has a lower horizontal trendline and a lower upper trendline, while a descending triangle has a horizontal trendline at the highest point and an upward trendline at the lowest point.

Also read : 

Triangle Pattern: How to Use, Types and Functions

Descending Triangle Bullish Reversal

You can identify a descending triangle reversal pattern at the top of a rally. This pattern appears when volume decreases and the stock fails to make a new high. The pattern indicates that bullish momentum is tiring. At the same time, price action forms a horizontal support level. After price bounces off the support level several times, posting lower highs, we can anticipate a potential downside breakout. The minimum distance the price moves before the breakout is measured from the initial high. This distance is projected lower after price breaks below the support level.
 
The descending triangle reversal pattern can be very easy to trade if you spot the pattern before the breakout. The next chart below illustrates a descending triangle reversal pattern in play. The stock chart for Morgan Stanley (MS) shows that after a strong rally, price stalled near the high. Note the support level that also stands out.



The resulting bounce from the support level leads to a lower high. After this, the price breaks below the support with strong momentum. As you can see, the minimum measurement distance is nothing but the projected high of the initial high.

How to Read Descending Triangle Bullish

Given its name, it should come as no surprise that the descending triangle pattern is the opposite of the pattern we just discussed. This triangle pattern offers traders a bearish signal, indicating that prices will continue to fall as the pattern resolves itself. Again, two trendlines form the pattern, but in this case, the lower support line is flat, while the upper resistance line slopes downward.
 
Just as ascending triangles are often continuation patterns that form in an overall uptrend, descending triangles are common continuation patterns that form in downtrends. When they appear during a long-term uptrend, they are usually considered to signal a possible market reversal and change in trend. This pattern develops when the price of a security falls but then bounces off the support line and rises.
 
However, each attempt to push the price higher is less successful than the previous one, and eventually, sellers take control of the market and push the price below the lower support line of the triangle. This action confirms the descending triangle pattern’s indication that prices are headed lower. Traders can short on the downside breakout,

Advantages and Disadvantages of Trading Using a Bullish Descending Triangle

The ascending triangle pattern offers many advantages, such as being easy to recognize and producing clear target levels, which are based on the maximum height of the triangle. However, one of the main drawbacks of using an ascending triangle is that there is always the potential for a false breakout, where the downtrend reverses the pattern. Also, there is always the possibility that price moves sideways or higher for an extended period of time, acting contrary to the usual features of an ascending triangle. In some situations, trendlines may need to be redrawn because price breaks out in the opposite direction than expected. After learning about the bullish ascending triangle, you can apply the trading methods explained above. In addition, you can register at GIC so you can trade forex with a capital starting from IDR 150,000!