The descending triangle flag is a chart pattern in technical analysis. Below are its characteristics and trading strategies:

Pattern Characteristics

• Similar to a triangle flag: The descending triangle flag resembles a flag on a pole, beginning with a steep decline in price accompanied by high trading volume, followed by a brief period of consolidation with reduced volume, forming a triangular flag surface.

• Flag surface shape: The flag surface consists of sloping sides that gradually lower from the high points and a horizontal bottom edge, with high points decreasing in succession and low points roughly at the same level.

• Volume changes: During the formation of the flagpole, trading volume is high, and during the consolidation phase, volume continues to shrink, while volume will increase again when the trend resumes its decline.

Trading Strategies

• Shorting timing: When the stock price breaks below the lower trendline of the triangle flag surface, it signals an opportunity to short.

• Target price level: After the descending triangle flag formation is complete, the theoretical target price decline is approximately equal to the length of the flagpole.

Market Implications

• Seller advantage: Reflects that the market's selling power is gradually gaining an advantage, with heavy selling pressure above and increasing selling strength.

• Change in psychological expectations: Investors' confidence in rising stock prices weakens, leading them to sell, further pushing down stock prices.

• Accelerated decline: When the stock price breaks below the support level of the bottom edge, it can easily trigger stop-loss orders and panic selling, leading to an accelerated decline.