Triangles, Descending

Core idea

A descending triangle is the mirror image of the ascending triangle: a horizontal trendline along the lows (a flat support floor) and a down-sloping trendline along the highs (falling resistance). The shape suggests buyers willing to defend a single floor while sellers grow less aggressive about waiting for higher prices — they hit the bid earlier each rally. Eventually the floor cracks and price falls.

Despite the bearish name and visual, the data is humbling. The breakout direction is nearly random with a 51% upward bias. In other words, the descending triangle resolves up slightly more often than it resolves down. The bias only shows up cleanly in bear markets, where downward breakouts have the lowest failure rate. Trade descending triangles for what they tell you about supply and demand in equilibrium — not for their name.

Why it matters

Descending triangles are easy to spot and abundant. They mark genuine distribution at a price floor — the more times sellers hit the bid before the floor, the more conviction the eventual breakout carries. The best trade is often counterintuitive: an upward breakout from a descending triangle, especially in a bull market, ranks 7th out of 19 for performance — better than the downward "expected" breakout.

Why direction is near-random

The flat-floor / falling-top geometry is itself symmetric: the floor or the sloping line can break first, and the falling top is closer to current price than the floor is. That asymmetry pushes the random-walk breakout direction toward "up" by a hair. The name "descending" describes only the slope of the upper line, not the bias of the breakout.

Measuring the target

Bulkowski's measure rule for descending triangles is: take the height between the two trendlines at the start of the pattern, subtract from the horizontal lower trendline, and use that as the target. Like other triangle patterns, this often overshoots reality. Cutting the height in half before computing the target improves accuracy.

Key takeaways

Mental model

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Practical application

Trading the breakout

Example

A retailer is forming a descending triangle from March to May. Horizontal floor at $30 with three touches; down-sloping top from $36 (March high) through $34 (April high) to $32 (early May high), three touches. Volume tapers from 1.2M average to 350k. The S&P 500 has been declining for two months.

• Both-direction entry plan:
  • Sell stop at $29.90 (below floor) — primary plan given bearish market.
  • Buy stop at $32.10 (above falling top) — secondary, smaller size.
• If downward breakout triggers at $29.90:
  • Stop at $31.50 (above the most recent top touch). Risk: about 5%.
  • Halved measure-rule height = ($36 − $30) / 2 = $3. Target = $30 − $3 = $27. Reward: 10%.
• If upward breakout triggers at $32.10 instead:
  • In a bear-market context this is a likely bust. Take smaller size, tighter stop at $30 (below the floor).

The discipline is taking what the chart gives you rather than insisting that "descending" must mean "decline."

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