Descending Channel

Descending Channel

A downward moving channel formed by two parallel, downward sloping trendlines. The upper trendline connects a stock's highs over a period of time, with each subsequent high price lower than the previous. Conversely, the lower trendline connects the stock's lows, with each subsequent low price lower than the previous.

Notes:

As a general rule of thumb, the failure of any move within an established price channel to reach one side of the channel usually indicates that the trend is shifting and increases the likelihood that the other side of the channel will be broken. Thus, the clearing of the lower trendline could indicate an accelerating (downward) trend and the clearing of the upper trendline could indicate a decelerating (downward) trend.

See also: Ascending Channel, Channel, Horizontal Channel, Profit-Taking, Range-Bound Trading, Technical Analysis, Technically Strong Market, Technically Weak Market, Trend Analysis, Trendline