Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
I find BTC chart interesting as it is forming a textbook Descending Triangle, so I thought it would be a practical example to highlight it now.
📌 First, let's start with the definition of a Descending Triangle: 🗒 What is a Descending Triangle? A descending triangle is a bearish chart pattern used in technical analysis that is created by drawing one trend line that connects a series of lower highs and a second horizontal trend line that connects a series of equal lows.
📉 Traditionally, a regular descending triangle pattern is considered to be a bearish chart pattern.
However, in my opinion, even thought a bearish continuation is more probable, all triangles are bilateral patterns. Means they can be broken either side.
📌 How to trade a Descending Triangle pattern? 🗒 Remember: A pattern would be an idea, until activated.
In our case, for the descending triangle pattern to get activated, we need an H4 candle close below the lower bound. (around 15500 in red)
In parallel, for the bulls to kick in, and invalidate the bearish scenario, we need an H4 candle close above the upper bound. (around 17100 in blue)
📌 Trade / Risk Management: 🗒 When the pattern is activated, you can enter immediately after the candle closes, or wait for it to retest the trendline first.
Regarding the stop loss, it goes above/below the last high/low from the other side.
Regarding the take profit, the project would be the biggest distance between the highs and lows inside the triangle.
Hope you find this post useful. Let me know if you have any questions.
Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly! ~Rich
Not charted very well. Why you didnt put 18.100 as first point, that will make sense to be desceding triangle. In that case it is already invalidated. Also you have bullish divergence on daily TF and weekly probably ... this is going up to 18.700 probably ... and descending triangle can break to upside also ... in that case it can be reaversal pattern. Everything is not always black and white ... gl in any case.
TheSignalyst
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@lesa666, you can draw it in multiple ways that why I am waiting for the break of the blue high or red low to confirm the breakout. exactly, I also mentioned in the description that triangles are bilateral patterns ;) and mentioned both scenarios that I am personally waiting for as per my trading plan
lesa666
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@TheSignalyst, okay ... that pattern can easily become falling wedge ... look at bullish divergence on daily TF ... another low will create triple ... extreamly bullish signal ... you can get stuck if you are waiting breakdown ... always look what is RSI doing on bigger TF, think that is pattern is in creation ... gl ... in any case