I get confused whether one goes long or short with descending triangle pattern.
say I find top line slop is downwards …lower highs …and base is horizontal …this is a descending triangle …what action one takes … long or short ? what is favorable ?
Theoretically, you’ll want to trade breaks to the downside on a descending triangle, and breaks to the upside on an ascending triangle.
However, these patterns don’t follow theory 100% of the time.
In my opinion, it’s best to couple a pattern with a few indicators, price action, volume and other technical/fundamental analysis.
It should be pretty clear whether or not a structure may hold or break, based on the aforementioned enhancers.
Bottom line, even if it doesn’t follow theory 100% of the time, you mitigate risk by not over-leveraging yourself, and over time you can be profitable if you stay disciplined and curb emotions when it comes to decision making.
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@ForexUnlimied,
Thanks for the post…you are very fast ! … I just uploaded pattern.
Does your comments still the aligns with this ?
Somewhat-
I really stay away from these patterns just because they aren’t as reliable (I’ve found) as others such as wedges and channels (my two favorite to trade).
That’s the thing, a descending triangle can break to the topside like you’ve shown, and run off into the wind.
Or, it can break to the topside, run the stops on weak short positions, then clear out and break back down beneath the triangle.
With these, you can trade them more conservatively.
Take your descending triangle. You can wait for a break to the downside, then get in on a corrective pullback to prior structural support. Tick volume and price action can help confirm whether or not the downside break is sustainable.
After you enter, you can target the lows of the initial break.
Does that make sense?
Jake
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yea…its better…logical… I admire your typing speed …superfast.
you said you like wedges …I too wanted to know a little more on this …
see this wedge … what you wanna do for this wedge ? BUY/SELL ? what would you favor ?
Let me answer my own question …I’d love to go for BUY in my above post… …because its a rising trendline…
but see this wedge …this betrayed …its a fallen knife.
I dont find confidence in wedges …anything missing here ?
I like shorting ascending wedges and buying into descending wedges.
It’s going against the trend, so it’s going to take a bit more skill and experience.
I have a few different strategies, but, that wedge above did not “betray” anyone or anything :).
An ascending wedge should break to the downside.
Try and read up on what type of price action creates this pattern.
A pattern is just a few lines on a chart. If you try to understand the underlying order flow, you’ll have more confidence interacting with the market.
Typically, @ the peak of the wedge I like to see
-Low buying volume
-An exhaustive move to trap weak hands (sell into a rally)
-A stochastic signal (either an overbought reading, stochastic coil, or bearish divergence)
-Some type of horizontal S/R level or Supply/Demand level/zone
There are multiple points of entry as well.
Just search out these terms on the web for clarification.
“I’d love to go for a BUY in my above post” = Why?
Why would you be looking to potentially get in @ the absolute peak of a move? This is where smart money players would potentially look to be selling to you and trapping you in a weak hand. Yes, the trend may resume, but, I’d aire on the side of caution if the above enhancements I laid out are all present.
Jake
