The simple descending triangle chart pattern forex trading strategy, as the name says, is based on the forex descending trial pattern, and it is the complete opposite of the simple ascending triangle chart pattern forex trading strategy.
The forex descending triangle pattern is a bearish chart pattern, which means if you see it, there’s the likelihood that the price will fall.
So how do you spot the descending forex chart pattern on the mt4 chart? Well, watch for these:
- the market can be in a market uptrend, or it can already be in a downtrend
- Then you will see chart price will start to consolidate a bit as it hits a chart support level, and it will bounce up and hit resistance and move down to the chart support level and move up. The chart resistance will continue to squeeze the price down when it moves up until a breakout happens to the downside.
Here’s what I’m talking about:
The Trading Rules -The Descending Triangle Chart Pattern
- Wait for the chart breakout candlestick to form. The breakout chart candlestick is the candlestick that makes a sustained move down, breaking the support level, and must close below it.
- Place a sell stop order two pips below its low.
- Place your stop loss(Sl) 5-10 pips above the breakout candlestick’s high.
- You can use the previous chart swing lows for-profit target or calculate based on the 1:3 risk to reward(R: R) ratio.
Advantages of the Simple Descending Triangle Chart Pattern Forex strategy
- Explosive downward price moves tend to happen when this pattern forms, so it pays to know this chart pattern.
- Risk: rewards are suitable for this forex trading system.
Disadvantages of The Simple Descending Triangle Chart Pattern Forex Strategy
- sometimes the breakout candlestick can be very long, which means your stop loss distance in pips can be huge
- Sometimes, instead of breaking downwards, price and shoot up, in such instances, you can switch to using the trendline breakout forex trading strategy.
Further Reference For You To Read About The Descending Triangle Chart Pattern
Tutorial On Descending Triangles Chart Pattern: