Descending Channel

DEFINITION of 'Descending Channel'

A descending channel or downtrend is the price action contained between two downward sloping parallel lines. Lower pivot highs and lower pivot lows are a bearish signal. In a downtrend, a trade might be entered at the trendline and exited at the channel line. A lower low below a descending channel can signal continuation. A higher high above the low of an ascending channel can signal trend change.

BREAKING DOWN 'Descending Channel'

Price channels show trend direction. The slope of the channel shows momentum. Here is a simple technical edge: start the down trendline using two lower pivot highs and stay short below the trendline.

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