Descending Triangle:

Here's a step-by-step explanation of how the Descending Triangle pattern typically forms:

1. Established Uptrend:
   • The Bullish Descending Triangle pattern typically forms during an uptrend.
   • This prior uptrend provides the context for a continuation pattern, suggesting that buyers are in control before a period of consolidation.
2. Resistance Line (Descending Upper Trendline):
   • A downward-sloping resistance line is formed by connecting lower highs in the price.
   • This indicates gradual profit-taking or selling pressure, but buyers continue to support the price at a key level.
3. Support Line (Horizontal Lower Trendline):
   • A flat, horizontal support line is drawn connecting multiple swing lows at approximately the same price level.
   • This area reflects strong buying interest, preventing the price from falling further.
4. Formation of Triangle:
   • The descending resistance line and horizontal support line together form a triangle.
   • This triangle slopes downward due to lower highs, but is underpinned by a stable base — indicating consolidation within a bullish trend.
5. Decreasing Volatility:
   • As the pattern matures, the price range narrows between resistance and support.
   • This tightening reflects decreasing volatility and increasing tension between bulls and bears.
6. Breakout Anticipation:
   • Traders watch closely for a breakout above the descending resistance line.
   • This breakout typically signals a continuation of the prior uptrend.
7. Volume Analysis:
   • Volume generally declines during the pattern’s formation, reflecting indecision.
   • A spike in volume on breakout strongly confirms the validity of the pattern.
8. Breakout Confirmation:
   • The pattern is confirmed when the price breaks out above the descending resistance line with strong volume.
   • This suggests that buying pressure has overcome selling resistance, resuming the uptrend.
9. Trading Strategy:
   • Traders often enter long positions after a confirmed breakout above the resistance.
   • Stop-loss orders may be placed just below the support level or the last swing low to manage risk.
10. Price Target Projection:
    • Measure the vertical height of the triangle (from the initial high to the support line).
    • Add this height to the breakout point to estimate the price target after the breakout.
11. Confirmation and Monitoring:
    • After the breakout, traders monitor for a retest of the breakout level (previous resistance may act as new support).
    • Valid breakout and sustained momentum offer high-probability bullish trading opportunities, especially when supported by technical indicators like volume, RSI, or MACD.