Bearish Pattern Indicating Distribution
Learning to use the techniques of technical analysis, which consist of tracking and charting stock patterns like the descending triangle, will teach you how to make educated predictions that will have a good chance of coming true.
If you’re interested in being able to spot this pattern in your stock charts, it might help to think about it by its other name, the right-angle triangle. When this pattern manifests itself on the charts, you’ll start to notice a horizontal line forming at the bottom of two or more distinct low points. At the same time, you’ll also want to look for two or more declining points that will eventually form a negatively sloping trend line that slowly converges with the horizontal line. If you were able to extend both of these lines, the declining trend line would form the hypotenuse of a right triangle.
If you’ve never heard of the descending triangle before, you should know that it is considered to be a bearish pattern, which means that its presence usually indicates a downward trend for any particular stock. In order to spot continuation patterns like this, you often have to track the behavior of a certain stock for weeks or even months. Although this pattern can also sometimes indicate a reversal, this is rare. This pattern is different from other triangles in that the horizontal line indicates a demand that will prevent the stock from declining past a certain level in price.