A descending triangle is the exact opposite of an ascending triangle. After the currency price falls for a period of time, stable purchasing power appears in a specific price area. Every time the currency price falls back to this level, it stops falling and rises, and a horizontal straight line is formed by connecting each low point. However, the high point of each rebound of the currency price is higher and lower than the previous one, and a downward sloping line is formed by connecting each high point. Like the ascending triangle, the volume gradually decreases as a whole along the direction of the triangle's tip. as the picture shows:
The high point of each rebound of the descending triangle is getting lower and lower, which is a signal of decline, so the probability of a downward breakthrough in the market outlook is higher. When the currency price falls below the lower line, it conforms to the Dow theory's definition of a downtrend: the latter high is lower than the former high, and the latter low is lower than the former low. Therefore, the descending triangle is mostly indicative of a continuation of the bearish outlook.
The technical characteristics of the descending triangle
(1). Generally , they happen in the process of falling, and a few happen in the process of rising
(2). The low point of each decline is basically on a horizontal line, and the high point of the rise is gradually reduced. Connect the highs and highs, lows and lows respectively to form a horizontal right triangle on the upper line
(3). The overall volume gradually shrinks along the direction of the tip of the triangle
(4). After the currency price breaks through the lower line, it sometimes pulls back to the side line. Whether it will be withdrawn, there is currently no technical means to predict.
The technical meaning of the descending triangle
(1). After falling below the lower line of the descending triangle, the market outlook is bearish, which is a sell signal
(2). When the currency price breaks through the upper line of the descending triangle, the market outlook is bullish, which is a buy signal
Example of BTC real market
In the BTC11-15 market, BTC started to pull back from the highest point of 69,000 US dollars, got out of the triangle arrangement, and then fell below the lower line of the triangle, and the lowest fell to 58,500 US dollars.
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