Descending triangle trading strategy

Below is a good example of the descending triangle pattern appearing on NZD/CAD. A downtrend leads into the consolidation period where sellers outweigh buyers and slowly push price lower. A strong break of the lower trendline presents traders with an opportunity to go short. In this example, it doesn’t take long for the position to move in the opposite direction, highlighting the importance of setting an appropriate stop level.

The take profit level is set using the vertical distance measured at the beginning of the descending triangle formation.