Price Patterns - Descending Triangle Indicates a Price Downside

A descending triangle is a bearish formation in which the successful highs continue to go lower and the successive lows remain stable until a new low falls below the support level defined by previous lows. A descending triangle tells you that prices are on the downside and may fall more.

The chart of Credence Systems (CMOS), a provider of semiconductor test systems, shows a multi-year descending triangle. The highs kept going lower but the lows remained at a support level just above $5 until May 26, 2006 when the stock closed at $4.57, a multi-year low.

Posted May 28, 2006.