What is a Descending Triangle Pattern?
This pattern is similar tho the ascending triangle chart pattern but reverse, it shows two converging trendlines (support levels & resistance levels) and is a bearish formation that usually forms during a currency pair downtrend as a continuation pattern (downtrend will continue).
This pattern is confirmed when the currency pair price breaks out of the descending triangle formation to the downside and closes below the lower support trendline. However, when the currency pair price breaks out to the upside, the descending triangle now is a reversal pattern.
What does a Descending Triangle Formation look like?
The descending triangle is marked by two important trend lines. At its top, there is a line of resistance where traders are willing to sell the currency pair. This resistance line communicates the fact that bearish currency traders are over time willing to pay lower and lower prices for the currency pair indicating a breakout to the downside.
At the bottom, we notice the support trend line where forex traders are willing to buy the currency pair.
How to trade this charts pattern?
Sell the currency pair when price breaks out of the descending triangle formation to the downside and closes below the lower support trendline.