Descending Triangle Pattern

-Descending triangle pattern is formed with horizontal line on lower side and on upper a downward sloping trendline.

-Atleast two touches on both sides are needed for a complete pattern.

-A downward breakout is more common but an upward breakout can also be visible (as shown in above image.)

-I personally have found upward breakout to be more profitable.

-The prices compress within the triangular range and breakout on either side result in explosive moves.

-This pattern will test your patience a lot

-Breaks out & keep moving in the direction

-Breaks out but enters back in range

-Breaks out but more than one pullback will be visible

-Trade should be analyzed & entered carefully

Below is Daily chart of HDFC Bank during 90's

Best Pattern :

-There is no specific best pattern

-There's a contradiction with the conventional decreasing volume during range outlook in this pattern - Volume increasing during the end of pattern makes it more profitable.

-Pullbacks and throwbacks are preferable

How to calculate target :

1. Specific Target (Left Side)

2. Trailing Stop Loss (Right Side)

Below is 1hr chart of HDFC Bank

How to trade the pattern :

-I prefer the pattern to form completely & give a decisive breakout

-Stop loss is taken as the starting of either of the trendline depending on the breakout

Below is 1hr chart of HDFC Bank

What can go wrong :

-False breakouts

Below is Daily chart of HDFC Bank

Patterns will not be always correct. Respect your stop losses to protect your capital.

Happy trading!