Tips for Trading Descending Triangles Long

by Jeff Cartridge

The Descending triangle is a very well known chart pattern that is usually traded short, but can also be traded if it breaks out to the upside. A descending triangle is formed when the price action is contained within two lines. The bottom line is close to horizontal while the top line slopes down towards the bottom line. 

Descending Triangles, Ok To Trade 

Descending triangles are one of the most predictable patterns that are available to trade short, but also can perform on the upside. Just 43% of the patterns break upwards and can deliver good returns when they do. The average gain is 0.87% in 8 days with half of the breakouts (41%) being profitable. There are better patterns to trade on the long side, but selecting the right conditions can make trading descending triangles attractive. 

Specific Setups to Improve Profitability 

A long breakout from a descending triangle works better in a rising market and sector environment. Ensure both the market and sector, are in a consolidation phase or an up trend prior to the breakout. The stock will usually be falling as it forms the pattern. Essentially you are trading the descending triangle when it forms during a pull back in a bullish environment.


Descending triangles that breakout early in the pattern, produce inferior results. A breakout is better if it occurs after the pattern gets 30% of the way to the point of the pattern. Shallow patterns are also best avoided, where the pattern height is less than 2% when compared to the stock price. 

Illiquid stock can sometimes be identified by two identical closes or highs and if this is the case you are better to avoid these trades. If volume supports a descending triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be greater than volume when the stock is going down. 

Trading Descending Triangles Can Be Profitable 

You can improve your trading results by using a series of simple filters that have been outlined here. This select group of descending triangles delivers an average profit of 1.45% in 10 days and is profitable on 51% of the trades. Overall this makes descending triangles attractive to trade. 

Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 – 2008.
About the Author:
Jeff Cartridge has been trading chart patterns since 1998 and created the website LearnCFDs.com Trading Chart Patterns – All The Insider Tricks

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