Technical Analysis -- Episode 11: Descending triangle

Tiger_Academy
2023-09-22
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Descending Triangle is a common price pattern frequently observed in technical analysis.

In simple terms, the Descending Triangle is a shape of prices that appears during a downtrend and consists of a downward-sloping resistance line and a horizontal or slightly rising support line, implying a potential further decline in prices.

The characteristics of the Descending Triangle are as follows:

  1. Downtrend: The Descending Triangle appears in a clear downtrend, indicating strong selling pressure.

  2. Resistance Line: Above the Descending Triangle is a slanting downward resistance line that connects the descending high points of prices. This line represents selling pressure that prevents prices from rising.

  3. Support Line: Below the Descending Triangle is a horizontal or slightly rising support line that connects the relatively flat or slightly rising low points of prices. This line represents buying support that resists price declines.

  4. Trading Volume: In the Descending Triangle, trading volume usually decreases gradually, reflecting market participants' hesitation and watchfulness for further declines.

  5. Breakout: The breakout of the Descending Triangle typically occurs when the price breaks through the support line. Once the price breaks the support line, more downward movement is likely, further confirming the downtrend.

The significance of the Descending Triangle lies in its indication of a potential further decline in prices. Investors can formulate trading strategies by observing the breakout point.

Generally, the breakthrough of the support line is considered a selling signal, while before the breakout, investors may choose to wait and adopt cautious trading strategies.

Let me give you an example to help you better understand the Descending Triangle:

NASDAQ Index (IXIC) - During the period from January 12, 2021, to February 20, 2021, a Descending Triangle pattern appeared. When the candlestick trend broke through the support line, the stock price experienced further declines.

Source:Tiger trade appSource:Tiger trade app

Therefore, when observing the Descending Triangle technical pattern, you should pay attention to the changes in the support line, resistance line, and trading volume, and consider the timing of entering or exiting after confirming the breakout.

Additionally, you need to integrate other technical indicators and trends for comprehensive analysis to enhance the accuracy of your trading decisions.

When observing the Descending Triangle technical pattern, you also need to pay attention to the following aspects:

  1. Support Line: Observe the descending support line, which is a horizontal or slightly rising segment. If the price breaks through the support line, it may indicate further price declines.

  2. Resistance Line: Observe the descending resistance line, which is a downward-sloping segment. Whenever the price rebounds near the resistance line, it usually encounters resistance and continues to decline.

  3. Trading Volume: Pay attention to changes in trading volume. In the Descending Triangle, trading volume usually decreases gradually. However, when the price breaks the support line, a higher trading volume may suggest further price declines.

  4. Target Price: You can use the Descending Triangle's height measurement method to predict the downside target price. The target price is usually derived by extending the height of the triangle downward from the breakout point.

  5. Confirm Breakout: Consider trading only after confirming a clear breakout of the support line. Confirming the breakout can reduce the risk of false signals and wrong trades.

In conclusion, the Descending Triangle is a bearish pattern in technical analysis, but it is not 100% accurate, requiring us to combine other indicators for comprehensive analysis.

【Reply to Win Rewards】

Tigers who select the right chart pattern of the Descending Triangle from the following three figures will receive 5 Tiger Coins. (Please comment on the stock or the photo directly)

Figure 1Figure 1

Figure 2Figure 2

Figure 3Figure 3

Tigers who share stocks of chart out of the following options will be rewarded with 10 Tiger Coins.

【Event Duration】

22 September 2023 — 26 September 2023

In the next issue, we'll introduce another useful technical pattern, the Double top pattern, which will make your stock trading easier and simpler after you learn it!

Technical Hunter
Technical analysis: Classic chart patterns for stock picking.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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Comments

  • icycrystal
    2023-09-22
    icycrystal
    Win 5 Tiger-coins
  • TimothyX
    2023-09-22
    TimothyX
    Win 5 Tiger-coins
    下行三角形的特徵如下:


    下降趨勢:下降三角形出現在明顯的下降趨勢中,表明強大的拋售壓力。
    阻力線:下降三角形上方是一條傾斜的向下阻力線,連接價格下降的高點。這條線代表阻止價格上漲的拋售壓力。
    支撐線:下降三角形下方是一條水平或小幅上升的支撐線,連接價格相對平坦或小幅上升的低點。這條線代表抵制價格下跌的買入支撐。
    交易量:在下降三角形中,交易量通常會逐漸減少,反映出市場參與者對進一步下跌的猶豫和警惕。
    突破:下降三角形的突破通常發生在價格突破支撐線的時候。一旦價格突破支撐線,可能會有更多的下跌,進一步確認下跌趨勢。
  • MicroStrategist
    2023-09-22
    MicroStrategist
    Win 10 Tiger-coins
    Figure 1 Is the Descending Triangle 🔺️
  • AliceSam
    2023-09-22
    AliceSam
    Win 5 Tiger-coins
    下降三角形的意义在于它预示着价格可能会进一步下跌。投资者可以通过观察突破点来制定交易策略。
    $三倍做多富时中国ETF-Direxion(YINN)$这个算吗?
  • nomadic_m
    2023-09-22
    nomadic_m
    Win 10 Tiger-coins
    figure 1 is showing descending triangle
  • 007ws
    2023-09-22
    007ws
    Win 5 Tiger-coins
    thanks  @Tiger_Academy figure 1 is the descending triangle!
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