Technical Analysis -- Episode 11: Descending triangle
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:
Downtrend: The Descending Triangle appears in a clear downtrend, indicating strong selling pressure.
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.
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.
Trading Volume: In the Descending Triangle, trading volume usually decreases gradually, reflecting market participants' hesitation and watchfulness for further declines.
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 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:
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.
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.
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.
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.
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 1
Figure 2
Figure 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!
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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。
$三倍做多富时中国ETF-Direxion(YINN)$这个算吗？
Below the Descending Triangle is a Horizontal support line.
Thanks @Tiger_Academy for your important lesson on Descending Triangle which will be so useful to identify stocks so that we can take appropriate action in trading.
Cohen & Steers Qlty Inc Realty Fund Inc (RQI)
“Descending Triangle” pattern formed in Weekly Chart
一般突破支撐線被認爲是賣出信號，而在突破之前，投資者可能會選擇等待，採取謹慎的交易策略。
🌟🌟🌟A good example of Descending Triangle would be $AMC Entertainment(AMC)$
which is down 92% from its 52 weeks high of USD 91.50. This was due to the recent court ruling by a US judge to allow the release of 40 million shares into the market, thus diluting AMC shares massively.
Can AMC recover? Let's hope so as it is pinning its hopes on Taylor Swift's film on her Eras Tour and new blockbuster films in the pipeline.
@Tiger_Academy
@CL Wong @MeowKitty @koolgal come and join me