Descending Channel

  

Categories: Charts, Trading

When your bottle of perfume continues to evaporate and/or get used up and out, it is a descending Chanel (number 5 is our fave, but can really be any number).

A Descending Channel, however, is different. It is, in fact, a stock trading pattern, in which a given stock started at, say, $25, then missed its quarter and dropped to $23 fast. It then suffered more bad news, plus rumors of an accounting restatement—and the stock dropped another $4.

It has accelerated its decline and is now in a pattern of a descending channel, which is usually a bearish sign for stock traders who stare at charts to try and glean the future of stock trades.

See: Chartist. See: Technical Trading. See: Ascending Triangle. See: Descending Triangle.

Related or Semi-related Video

Finance: What are Ascending and Descendi...2 Views

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Finance a la shmoop what are asending and descending tops and triangles well

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it's almost like a stock breakout to the good is being squeezed out the end right [Ascending triangle stock prices on a graph]

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here... well in this pattern it's like the stock can't help but go up at

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the end of the triangles here well ascending tops and triangles is a trading

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pattern used by Chartist style traders ie traders who just focus on the graphic

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representation of stock performance, well the same holds true for descending tops

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and triangles basically take everything we said here and invert it..Oh head rush [Triangle inverted on graph]

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there flip that back over - Note the pattern here of ups and downs but as

00:43

time progresses the blue line at the bottom acts as if it's a lower limit [Arrow points to blue lower limit line]

00:47

where the stock can't bounce through that virtual floor it just goes up and

00:51

then one day like as zit that's bursting at the seams well the stock pops and

00:55

creates a new set of ascending tops and triangles hopefully it doesn't leave a

00:59

pock mark on your portfolio well when it does that [Man holding up portfolio]

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