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What is the “Bearish Triangle” Price Pattern?

January 4, 2023 |
　　　

The Bearish Triangle pattern, and how to use it

The bearish triangle is a chart pattern that is formed by a horizontal resistance level and a downward sloping support level. This pattern is created when the price of an asset is restrained by a horizontal resistance level, but the support level is steadily decreasing. The bearish triangle is a continuation pattern, which means that it is typically seen as a bearish sign and indicates that the asset’s price is likely to continue falling.

To form a bearish triangle, the asset’s price will typically make a series of lower highs and test the resistance level several times before breaking through. Once the price breaks through the resistance level, it is likely to continue falling, as traders will likely enter into short positions and push the price lower.

One of the key characteristics of the bearish triangle is that the trading volume tends to decrease as the pattern progresses. This is because the horizontal resistance level acts as a barrier, preventing the price from breaking through and causing traders to become less active. However, once the price does break through the resistance level, trading volume tends to increase as traders enter into short positions and push the price lower.

In order to trade the bearish triangle pattern, traders should look for the following characteristics:

  1. A horizontal resistance level: This is a level at which the asset’s price has consistently struggled to break through in the past.
  2. A downward sloping support level: This is a trendline that connects the series of lower highs.
  3. Decreasing trading volume: As the pattern progresses and the price continues to test the resistance level, trading volume should decrease.
  4. A breakout: Once the price breaks through the resistance level, traders should enter into short positions and expect the price to continue falling.

http://monetamark1stg.wpenginepowered.com/wp-content/uploads/2022/12/bearish-triangle.png


It is important to note that the bearish triangle is a bearish pattern, but it is not a guarantee that the asset’s price will fall. As with any trading strategy, it is important to use risk management techniques and to always be aware of the potential for losses.

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