Descending Triangle Patterns: Guide for Australian Investors in 2025

Is your portfolio ready for a market move? The descending triangle pattern is sending signals across ASX charts in 2025. Here’s how to spot it, what it means, and how to respond as an Australian investor.

What Is a Descending Triangle and Why Does It Matter?

A descending triangle is a technical analysis chart pattern that traders watch closely. It features a horizontal support line and a series of lower highs, forming a triangle that points downward. In essence, it suggests growing bearish pressure: sellers are willing to accept lower prices, while buyers are holding a key support level—until one side gives way.

• Support line: The base of the triangle, typically where price bounces several times.

• Descending trendline: Connects lower highs, showing sellers’ increasing dominance.

• Breakout potential: When the price breaches the support line, it often triggers a sharp move—usually down.

While often considered a bearish continuation pattern, descending triangles can sometimes produce false breakouts, especially in volatile markets. In 2025, with the ASX and global markets facing increased geopolitical risk and shifting RBA policy, these patterns are popping up in sectors from mining to tech.

Real-World Examples: ASX Stocks and the 2025 Market Context

Let’s look at how this pattern has played out recently on Australian charts:

• Fortescue Metals Group (FMG): In Q1 2025, FMG formed a textbook descending triangle as iron ore prices softened. The support at $20 was tested multiple times before breaking in late February, triggering a rapid sell-off as commodity sentiment soured.

• Zip Co (ZIP): In the fintech sector, Zip Co’s daily chart showed a descending triangle from January to March 2025, reflecting pressure from rising interest rates and investor caution. The eventual breakdown saw ZIP fall below its 2024 lows, amplifying losses for leveraged traders.

• Commonwealth Bank (CBA): Even blue chips haven’t been immune. CBA briefly flirted with a descending triangle in April 2025 as housing credit growth stalled, but buyers stepped in—demonstrating that not all patterns resolve the same way.

These examples underline the importance of context. A pattern’s reliability can shift with macroeconomic conditions, sector trends, and even intraday news flow.

Trading Strategies for Descending Triangles in 2025

How can Aussie investors use descending triangles to their advantage?

• Wait for confirmation: The highest-probability trades come after a clear, high-volume break of support—not before. Premature short positions can be costly if a false breakout occurs.

• Set stop-loss orders: Volatility in 2025, fuelled by unpredictable global events and RBA rate tweaks, makes disciplined risk management essential. Place stops just above the last lower high or key moving average.

• Size your position wisely: With increased leverage in some ASX sectors, don’t overcommit on a single pattern. Use a fixed percentage of your capital per trade.

• Watch for reversals: Occasionally, a descending triangle will resolve upward—especially if macroeconomic news turns positive or a support level proves stronger than expected.

• Combine with other indicators: Pair triangle analysis with RSI, MACD, or volume analysis to boost your confidence in a signal.

Recent ASIC commentary in early 2025 has warned against over-reliance on technical patterns alone, especially as algorithmic trading can exaggerate moves. Combining chart signals with fundamental research is more important than ever.

2025 Policy Updates and Market Trends Affecting Technical Patterns

This year, several shifts are reshaping how technical patterns—including descending triangles—play out on Australian markets:

• RBA Policy: The Reserve Bank’s cautious approach to rate cuts in early 2025 has made markets more range-bound, increasing the frequency of triangle patterns as investors wait for clearer signals.

• ASX Regulation: New rules on leveraged products mean retail investors must meet stricter suitability tests, reducing the risk of whipsaw losses from false breakouts.

• Global Volatility: With US election uncertainty and China’s economic pivot, short-term chart patterns are resolving faster—sometimes within a single trading day.

For active traders, these policy updates mean greater attention to position sizing, liquidity, and news catalysts is required when acting on descending triangle signals.

Final Thoughts

Descending triangles are not crystal balls—but in the hands of savvy Australian investors, they’re a powerful tool for spotting shifts in market sentiment. In 2025’s complex environment, blending technical signals with a sharp eye on policy and sector trends will set you apart. The next time you see a descending triangle on an ASX chart, remember: context, confirmation, and caution are your best friends.