Descending Triangles

Descending Triangles

You have probably already guessed that the descending triangles are the graphical pattern of technical analysis as opposed to the upward triangles that we have seen in the previous article in our Forex course. In the descending triangles, there is a row of descending high peaks forming the top line. The bottom line is a level of support that the price does not seem to go through.

[caption id="attachment_711" align="aligncenter" width="443"] Descending Triangles[/caption]

 

In the chart above, you can see how the price is gradually making high peaks descending, which tells us this is that sellers are starting to gain ground against buyers. Most of the time, the price will generally break the support line and continue to fall.

However, in some cases the support line is very strong, and the price will rebound in it and make a strong upward movement.

The good news is that we do not care where the price goes. We only know that he is about to go to either side (up or down). In this case, we can place pending orders above the highest line and below the support line.

In this case, the price ended up crossing the support line and proceeded to fall quickly. Note: The market tends to fall faster than it rises, which means that you will generally make money faster with short (sale) operations than buying (going long).

 

[caption id="attachment_712" align="aligncenter" width="499"] Descending Triangles[/caption]

In this scenario, buyers won the battle and the price went up almost to heaven!

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.