When the Market is Descending, Should You?

Some people see a descending triangle in Forex and panic—kind of like when you realize that “Buy One, Get One Free” doesn’t mean “Buy None, Still Free.” But we’re not here to panic; we’re here to profit. If you’ve ever wondered how to turn a downward slope into a goldmine, sit tight. Today, I’m giving you the insider knowledge on position trading with a descending triangle, aka, your ticket to leveraging pessimism in the market and enjoying the show from a hammock. For those of you in the game for weeks or even months, this strategy is an absolute must-have in your toolkit.

The Magic Behind Position Trading (Weeks to Months)

Position trading is like planting a garden—you sow the seeds, and instead of watching over them anxiously, you kick back for a few weeks, maybe even a couple of months, until those seeds have turned into a flourishing vegetable patch. Except in this case, your garden is full of pips, and the only weeds are the bad positions you carefully pruned out earlier. The secret sauce of position trading lies in spotting those major trends that others seem to miss, a kind of “Hindsight 20/20, but let’s use it now” approach.

Why The Descending Triangle is the Opposite of a Bad Breakup

We’ve all seen the descending triangle pattern. It’s that gradual narrowing downward trend where prices keep touching a support level but get squeezed by lower highs. A lot of people look at this pattern and treat it like a red flag—like when your date says they “used to trade penny stocks and definitely would never do it again.” But let me share a secret: the descending triangle isn’t a red flag; it’s a red carpet to profits for traders with the guts and the patience.

When a descending triangle forms over weeks or even months, it’s like the market is daring you to take advantage of it. The triangle typically indicates a continuation pattern, meaning the price is likely to break through the support level and continue falling. That’s where the magic happens for position traders—if you can ride that momentum, you’re effectively catching the market in a sleepwalk—it knows where it’s going, but doesn’t realize you’re following.

Ninja Tactics for Trading the Descending Triangle

Trading a descending triangle isn’t just about playing it safe. It’s about becoming a market ninja—you want to be stealthy, strategic, and ready for the strike. Here’s how you can do just that:

1. Patience as Your Power Move: It’s all about waiting for the breakout. When the descending triangle starts tightening, keep an eye on the volume. A breakout with high volume is like the market saying, “Alright, I’m ready.” If volume confirms, that’s your cue to go in hard.
2. Target Levels Like a Pro: Remember that support level we mentioned? Once it’s broken, calculate your price target. A handy rule of thumb: the potential drop is equal to the height of the initial triangle formation. Picture it—like dropping a ball off a ledge. You have a pretty good idea how far it’s gonna fall. No need to eyeball, though—let the chart tell you.
3. Stop Loss Strategy: Position trading is not about just throwing in a wild guess and praying it works out. Place your stop-loss order above the most recent high. Think of it as the “emergency exit” at a movie theater—you hope you never need it, but if the market catches fire, you’ll be thankful it’s there.

Why Position Trading in a Descending Triangle is the Opposite of Catching a Falling Knife

Catching a falling knife is the phrase that haunts traders’ dreams—if you’re not careful, you get cut deep and fast. Position trading a descending triangle is the smarter, lazier cousin of that analogy. Instead of “catching,” you’re setting a nice little cushion right where the knife will land. You know where the price wants to go—you’re just patiently waiting for it to get there.

Insider Tip: If you’re seeing increased market momentum and the sentiment is leaning bearish—like everyone suddenly agrees pineapple really doesn’t belong on pizza—you’ve got a solid confirmation that the support will break.

Underground Strategy: Using Economic Indicators to Spot the Perfect Set-Up

Economic Indicators like the PMI (Purchasing Managers Index) can give you a head start in recognizing when a descending triangle is more likely to break lower. Remember, PMIs are like the market’s “vibe check”—if they’re dropping, manufacturers are slowing down, meaning general economic sentiment is bearish. Combining this sentiment with your triangle pattern can give you that slight edge—the kind that takes a good trade to a “I just bought an island” kind of great.

Real-World Case Study: Take, for instance, the recent Eurozone PMI releases. When PMI figures showed contraction, we saw a significant descending triangle pattern forming in the EUR/USD. Traders who connected the dots between weak PMI data and this pattern had the conviction to take short positions just as the triangle broke. The result? An opportunity for significant profit as EUR/USD tumbled.

Expert Quotes: Straight from the Minds of Forex Wizards

James Mason, Senior FX Analyst at PipsAreUs.com, notes: “Descending triangles are misread far too often. The key isn’t just to see it; it’s about waiting for the opportune break. Volume is your best friend here—no volume, no trade.”

On the flip side, Maria Chen, a Forex strategist and author of “Beyond Patterns,” adds: “A descending triangle with weak support can be an ideal playground for position traders. With the right risk management, you can make more by doing less—it’s about timing your entry like a sniper, not a foot soldier.”

Game-Changing Ideas: Looking Beyond the Triangle

Combining with Divergence: If you really want to put the cherry on top of this trading strategy, look for bearish divergence on your RSI indicator as the descending triangle forms. Divergence acts like a double thumbs-up from the market saying, “Yeah, this break is probably legit.”

Layering Trades for Maximum Profit: When the support breaks, consider layering your trades. Instead of putting all your capital into one single entry, you can enter at the initial break, then again after the price retests the broken support as new resistance. Think of it like getting seconds on free dessert—why wouldn’t you if it’s going so well?

Wrap Up: Turning Market Anxiety into Profitability

At the end of the day, position trading a descending triangle isn’t rocket science—it’s more like being the calm surfer waiting for the perfect wave. You don’t jump at every little ripple, and you don’t panic when the water drops suddenly. Instead, you hang tight, watch the tide, and when the market finally breaks through that key support level, you ride it with patience, confidence, and maybe a few celebratory fist pumps.

And if all of this sounds easier said than done, why not take advantage of some expert resources? We at StarseedFX have a suite of tools designed to give you that elite trader edge—from the latest market news to a free trading journal that helps you track all these advanced strategies. Ready to take your trading from “just getting by” to “absolutely crushing it”? Join our community today.

Summary of Elite Tactics for the Descending Triangle Strategy

• Wait for the volume-backed breakout before entering your position.
• Use economic indicators like the PMI to gauge broader market sentiment.
• Place target levels equal to the height of the descending triangle.
• Layer your trades for increased profit potential during a solid downtrend.

Your edge in Forex trading is a combination of the right strategy and the right execution—master both, and you’ll be navigating the charts like a pro. Now get out there, spot those descending triangles, and let gravity do the work for you.

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Image Credits: Cover image at the top is AI-generated