Forex Swing Trading Strategy #8:(Descending Triangle Pattern Swing Trading System)

The Descending Triangle Pattern Swing Trading System is another one of the Triangle Pattern Formations:

The Descending Triangle Chart Pattern Formation Trading System Is the exact opposite of the Ascending Triangle formation and it is considered a bearish pattern.

Here is a comparison between the descending and ascending triangle chart patterns:

Bearish Descending Triangle Pattern

 

HOW TO SPOT THE DESCENDING TRIANGLE CHART PATTERN

It is quite simple, really: here’s how:

  1. First, the market has to be in a downtrend and at some stage, the price will consolidate  when it hits a support line and then it will move up but only to find resistance on the downward resistance trendline.
  2. The Price will continue be to squeezed into a tight spot until it a breakout happens-usually to the downside.

HOW TO TRADE THE DESCENDING TRIANGLE CHART PATTERN

As long as you know how to spot the descending triangle pattern chart formation, trading the pattern should be very easy. Here are the rules of the descending triangle pattern swing trading system:

  1. Wait for a breakout candlestick to break and close below the support line.
  2. Once that happens, place your sell stop order 3-5 pips under the low of the breakout candlestick.
  3. For stop loss placement, you have a couple of options: first option is to place you stop loss right above the downward resistance line (this is the best stop loss placement option because you wont get stopped out prematurely). The next option is to place you stop loss anywhere from 5-30 pips above the high of that breakout candlestick.
  4. Your take profit target: you can calculate the height of the pattern and use it to calculate your take profit target price level or you can place it at 3 times what your risked.

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