What is a decending triangle?
target It is said that the target for a Descending triangle is the support level minus the widest part of the triangle. In this particular case that measurement would not work because the widest part of the triangle is about $15. If you were to trade this you should have a stop above the new resistance level of $8. Why Does this pattern Work? A downtrend consists of lower highs and lower lows. With this pattern you are getting the lower highs. Each time the stock tries to rally up it fails to make it to the same height it did during the last rally. However unlike a downtrend you do not get lower lows in this pattern. Instead there is a strong support level keeping prices locked. This indicates that there is enough buying pressure in the stock to keep it from falling down to new lows, but not enough to make new highs. When the stock finally breaks down below the resistance level it indicates that the last stronghold that the bulls had in the market has been destroyed. This indicates the bears have taken control and are moving the stock to newer lows. Other Chart Patterns Looking at other chart patterns can give you an edge in the market. Below are a few important ones. Ascending Triangle – A bullish pattern Head and Shoulders - This comes at the bottom and tops of trends Rounding Top - Despite its name this is actually a bullish indicator
|
