Descending Channel
BearishContinuationBeginnerPrice falls between two parallel lines. Short the rally into the ceiling.
Verdict: SkipBitcoin 4H: 6 trades, won 50%, avg trade +0.7% vs random day −0.5% (too few trades to judge). Backtest
Price slides lower in steps. Each rally peaks below the last one, and each drop goes deeper.
step 1/7
Trade rules
| Direction | Short (sell) |
|---|---|
| Entry | Two falling, roughly parallel lines through 2 swing highs and 2 swing lows. After a new swing high touches the upper line, a candle CLOSES below the low of that rejection within 10 candles. |
| Cancelled if | Price trades above the touch high before that close. |
| Target | To the floor |
3 common mistakes
- Shorting the touch before sellers prove they're there.
- Calling two falling lines a channel when they converge: that's a wedge.
- Taking the trade when the floor is closer than the stop.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 · too few trades to judge | 6 | 50% | +0.71% | −0.45% |
| US large caps (50) · 1D · 2016-2026 | 46 | 48% | −1.19% | −0.60% |
Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.
pattern −55%random −27%