Descending Channel

A Descending Channel is identified by drawing a bearish trend line through Descending Tops.  A second trend line is drawn parallel to the first, but through the lowest price valleys. 

Descending Channel

A Descending Channel or downtrend is the price action contained between two downward sloping parallel lines.


Descending Channel Identification

A Descending Channel is identified by drawing a bearish trend line through Descending Tops.  A second trend line is drawn parallel to the first, but through the lowest price valleys.  The stock chart price action is contained within the Descending Channel. 

Descending Channel chart example

Descending Channel Application

Lower pivot highs and lower pivot lows are a bearish signal.  In a downtrend, a trade might be entered at the trend line 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.

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