In technical analysis, chart patterns play a crucial role in identifying potential price movements before they occur. Among the most powerful bearish continuation patterns is the Descending Triangle — a formation that often signals an impending breakdown in price. However, under certain market conditions, it can also lead to false breakouts or even reversals.

In this post, we’ll dive deep into how to identify, interpret, and trade the Descending Triangle Pattern, along with real trading strategies, entry and exit setups, and risk management examples.

🔹 What is a Descending Triangle Pattern?

A Descending Triangle is a bearish technical chart pattern that forms when the price makes lower highs while maintaining a horizontal support level. This pattern reflects selling pressure building up, as buyers repeatedly defend a particular price zone while sellers keep pushing prices lower.

Key Characteristics

  1. Flat support line — a strong demand zone where price finds buyers multiple times.
  2. Descending resistance line — each rally fails to reach the previous high, forming lower highs.
  3. Volume decline — volume tends to contract as the pattern develops.
  4. Breakout confirmation — occurs when the price closes below the horizontal support on high volume.

🔹 Psychology Behind the Pattern

The descending triangle represents a tug-of-war between buyers and sellers:

  • Sellers are getting increasingly aggressive, selling at lower levels each time.
  • Buyers try to defend a support level, but their strength weakens over time.
  • When the support finally breaks, a sharp downside move typically follows as stop-losses get triggered and new sellers enter the market.

🔹 How to Identify a Descending Triangle on a Chart

To confirm a valid descending triangle:

  1. The support line should connect at least two or more lows at nearly the same level.
  2. The resistance line should connect two or more lower highs.
  3. The pattern duration typically ranges from weeks to months in higher timeframes.
  4. Volume should decrease during consolidation and spike during the breakout.

Example (NIFTY Chart)
Suppose NIFTY forms a base around ₹22,000 multiple times while making lower highs from ₹22,900 → ₹22,600 → ₹22,300. When the price breaks below ₹22,000 with strong volume, it signals a descending triangle breakdown — indicating a potential bearish move toward ₹21,000 or lower.

🔹 Measuring the Target

The target after the breakout can be estimated using this simple formula:

Price Target = Support Level – (Height of Triangle)

Example:
If the resistance (top) is at ₹22,800 and the support is at ₹22,000,
then Height = ₹800.
If the breakout happens at ₹22,000, the expected target = ₹22,000 – ₹800 = ₹21,200.

🔹 Trading Strategies for Descending Triangle Pattern

Let’s look at multiple trading strategies — both conservative and aggressive — to capitalize on this pattern effectively.

1. Classic Breakdown Strategy (Most Common)

Best for: Trend traders and swing traders.

Steps:

  1. Identify a descending triangle in a downtrend.
  2. Wait for a breakout below the support line.
  3. Confirm with volume expansion and candle close below support.
  4. Enter short at or after the breakout candle’s close.
  5. Place stop-loss just above the last lower high.
  6. Set profit target equal to the height of the triangle.

Example:

  • Stock: Reliance Industries
  • Support: ₹2,500
  • Lower highs: ₹2,620 → ₹2,580 → ₹2,540
  • Breakdown candle closes at ₹2,480 with heavy volume.
  • Short Entry: ₹2,480
  • Stop-loss: ₹2,540
  • Target: ₹2,480 – ₹120 = ₹2,360

2. Retest Strategy (Low-Risk Entry)

Best for: Conservative traders waiting for confirmation.

Steps:

  1. Wait for the breakdown below support.
  2. Allow the price to retest the broken support (now resistance).
  3. Enter short when the retest fails (bearish candle forms).
  4. Stop-loss: Above retest high.
  5. Target: Same as classic method.

Example:
If Bank Nifty breaks ₹49,000 support, wait until it retests ₹49,000–₹49,200 and shows rejection.

  • Entry: ₹49,000
  • Stop-loss: ₹49,300
  • Target: ₹48,200

This strategy filters out false breakouts.

3. Volume Confirmation Strategy

Best for: Traders using volume as a confirmation tool.

Steps:

  1. Identify descending triangle and wait for a breakdown.
  2. Confirm breakout with at least 1.5× average volume.
  3. Enter after a strong volume candle confirms the move.
  4. Trail stop-loss using ATR (Average True Range).

Example:
If average volume is 5M and breakout volume is 8M → enter short confidently.

4. Multi-Timeframe Strategy

Best for: Position traders.

Steps:

  1. Identify descending triangle on daily timeframe.
  2. Confirm breakdown using 1-hour or 4-hour chart.
  3. Combine with moving averages (like 50 EMA & 200 EMA crossover).
  4. Enter only if higher timeframe confirms the trend.

Example:
Daily chart shows a descending triangle on HDFC Bank, and 4H chart confirms a 50 EMA crossover down — strong bearish confluence.

5. False Breakout Reversal Strategy

Best for: Contrarian traders.

Sometimes, descending triangles break upward, especially in bullish markets.

Steps:

  1. Price fakes a downside breakout but re-enters the triangle.
  2. Wait for a strong breakout above the descending trendline.
  3. Enter long after confirmation candle closes above resistance.
  4. Stop-loss: Below the fake breakout low.
  5. Target: Height of the triangle added to the breakout level.

Example:
Support ₹1,000; resistance ₹1,080; false breakdown to ₹980; then price breaks ₹1,080 upward.
→ Bullish reversal confirmed. Target = ₹1,080 + ₹80 = ₹1,160.

🔹 Risk Management Tips

  • Always confirm with volume and closing basis before entry.
  • Avoid trading triangles during news-heavy sessions (like RBI policy or Fed announcements).
  • Use a 1:2 or higher risk-reward ratio.
  • Avoid chasing breakouts — wait for retests or confirmation candles.

🔹 Common Mistakes Traders Make

  1. Entering before breakout confirmation.
  2. Ignoring volume signals — weak breakouts often fail.
  3. Using tight stop-losses near support levels.
  4. Forcing the pattern where no clear triangle exists.

🔹 Real Market Examples

Stock / IndexTimeframeSupportBreakdown LevelResult
NIFTY 50Daily₹22,000₹21,950Fell to ₹21,200
TCSDaily₹3,700₹3,680Dropped to ₹3,500
INFY4H₹1,450₹1,440Fell to ₹1,360
RelianceDaily₹2,500₹2,480Hit ₹2,350

🔹 Conclusion

The Descending Triangle Pattern is one of the most reliable continuation setups in technical analysis — especially when accompanied by volume confirmation and trend alignment.
While it usually signals bearish momentum, traders must be cautious of false breakouts and always apply risk management principles.

Whether you’re a day trader, swing trader, or position trader, mastering the descending triangle can help you spot early trend continuation opportunities and capitalize on powerful breakdowns.