Definition
As price repeatedly tests a support level, buyers attempt to defend it. However, sellers step in earlier on each rebound, creating lower highs. This behavior shows weakening demand and strengthening supply. Over time, buying interest at support is absorbed, and once price breaks below support, the downtrend resumes.
Simple Explanation
"Sellers are getting aggressive. They are willing to sell at lower and lower prices (lower highs), while buyers are only holding one price line (support). Eventually, the buyers give up, and the floor collapses."
Core Message
- Sellers are becoming increasingly aggressive
- Demand at support is being absorbed
- Lower highs indicate growing bearish control
- Breakdown confirms continuation of the downtrend
Visual Interpretation
Horizontal Support
A clearly defined price level where buying interest temporarily prevents further declines. Multiple tests make this level significant.
Falling Resistance
A downward-sloping trendline connecting lower highs. This line visually represents sellers entering at progressively lower prices.
Compression Zone
As price approaches the apex, the range tightens, reflecting declining volatility and building downside pressure.
Breakdown Area
A strong move below support, often with expanding volume, signals that sellers have overpowered buyers and are ready to push prices lower.
Summary
"Visually, the Descending Triangle appears as a flat bottom with a falling top. The consistent formation of lower highs is the most important visual cue, signaling bearish intent before the breakdown."
Market Psychology
Prior Downtrend
- The market enters the pattern after a bearish move, establishing negative bias.
Buyer Defense
- Buyers attempt to hold a fixed support level, causing temporary rebounds.
Seller Pressure
- Sellers step in earlier on each rally, pushing highs lower and compressing price action.
Bearish Resolution
- Once buyers at support are exhausted, price breaks down. Stop losses are triggered, and fresh sellers enter.
Identification Rules
Prior Trend
A prior downtrend or bearish bias should exist.
Support
Support must be relatively horizontal.
Resistance
Resistance line must slope downward.
Touches
At least two touches on support and resistance are required.
Volume
Volume should contract during formation.
Execution Strategy
Entry Signal
Sell on support breakdown
Stop Loss
Stop loss above trendline
Take Profit
Target pattern height
Signal Confirmation
Is the breakdown real?
- Strong bearish candle closing below support
- Expansion in volume during breakdown
- Price sustaining below the breakdown level
- Failed retest of support as resistance
Caution: Avoid anticipating the breakdown, as support bounces can be sharp.
Common Mistakes
Myth: Always breaks down
Upside breakouts can occur. Wait for confirmation.
Myth: Support must be exact
It is a zone. Slight wicks below it are common.
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