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Descending Triangle Forex Pattern

The descending triangle is simply a mirror image of the ascending triangle. It consists of a flat support line and a downward sloping resistance line. (See the Figure below). This pattern suggests that supply is larger than demand.

The currency is expected to break on the downside. The descending triangle also provides a price objective. This objective is calculated by measuring the width of the triangle base and then transposing it to the breakpoint.

As dsiplayed in the Figure, the support line, defined by points A, C, E, and G, is flat. The converging top line, defined by points B, D, F, and H, is sloped downward. The price objective is the width of the base of the triangle (AA'), measured above the support line from the breakout point I (IF.)

In the numerical example, the price objective is 1.3000, as the 1000-pip difference between 1.5000 and 1.4000, measured from 1.4000. Trading volume is decreasing steadily toward the tip of the triangle, but increases rapidly on the breakout.


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