Definition
A descending triangle is a chart pattern formed by a horizontal line of support along its bottom and a downward-sloping trendline connecting a series of falling minor highs. Price compresses between the two boundaries until it breaks free, most often through the flat bottom.
The shape reflects a market where sellers accept progressively lower prices while buyers repeatedly defend one fixed level. The narrowing range signals that the standoff is nearing resolution.
Why it matters
How it works
Each time price falls to the horizontal support, buyers absorb the selling and lift it back. But each subsequent rally stalls at a lower level, drawing the descending trendline. As the apex approaches, the contest compresses until one side yields. A close below support on increased volume confirms the downside breakout.
Traders often estimate a target with the measure rule: take the triangle's height at its widest and project it downward from the breakout point. Volume that contracts within the pattern and expands on the break adds confidence to the signal.