Descending (Down) Trendline

Descending (Down) Trendline

The declining wave in a stock or commodity is composed of a series of ripples. When the tops of these ripples form on, or very close to, a downward slanting straight line, a basic Descending or Down Trendline is formed.

Source: Edwards, Robert and Magee, John.Technical Analysis of Stock Trends 9th Edition; (c) 2007.

downward_trendlines

 

 

 

 

 

 

 

 

 

 

Source: Charts created by Bloomberg LP.  All rights reserved. Click here for more information on Bloomberg.

Several different trendlines can be in play at any one time. Important questions to ask are: Which trendlines are more valid? What kind of filters should be applied to breaks of trendlines? What does a failed trendline break signal?