Analyzing Chart Patterns: The Wedge

The upper resistance line and lower support line converge as the pattern matures.

While it is a consolidation formation, the loss of upside momentum on each successive high gives the pattern its bearish bias. 

The upper resistance line formed with three successively higher peaks. Each reaction low should be higher than the previous low.

Price Target 

Rising wedge. The wedge pattern can be used as either a continuation or reversal pattern, depending on where it is found on a price chart. There are two types of wedge pattern: the rising (or ascending) wedge and the falling (or descending wedge).

Also consider exiting any long positions. If trading a rising wedge, place a stop loss just above the most recent high within the wedge. When trading a falling wedge, place a stop loss just below the most recent swing low within the wedge. Price Target Wedges can be significant turning points. A breakout may see the price run in the breakout direction for long periods of time. Therefore, isn't a long-term price target for wedge. Rather the pattern gives us analytical insight into where the price is headed, and an entry point into what could be a large move.

Following a breakout, the price typically moves at least the height of the wedge measured at the base where the two trendlines start. Though the pattern is typically a signal of reversal, continuation of the uptrend is still possible. When present as a continuation pattern, the wedge will still slope to the upside, but the up-slope will typically be found as a pullback within a downtrend. When present as a reversal, the pattern will slope to the upside within an uptrend. Regardless of continuation or reversal, ascending broadening wedges are always bearish in nature.

What to Look For Trend Established: As with any reversal, there needs to be an established trend to reverse. The ascending broadening wedge can form on any time frame, and can mark the reversal of a short, intermediate, or long term trend. At times the overall trend may actually be consumed entirely by the pattern, while at other times the pattern forms after an extended advance.

At least two highs are required to draw the upper resistance trend line. Use this link to get the discount. Identifying the rising wedge pattern in an uptrend A rising wedge in an uptrend is considered a reversal pattern that occurs when the price is making higher highs and higher lows.

As the chart below shows, this is identified by a contracting range in prices. The price is confined within two lines which get closer together to create a pattern.

This indicates a slowing of momentum and it usually precedes a reversal to the downside. This means that you can look for potential selling opportunities. Identifying the rising wedge pattern in an downtrend A rising wedge in a downtrend is a temporary price movement in the opposite direction market retracement.

As in the case of a rising wedge in a uptrend, it is characterised by shrinking prices that are confined within two lines coming together to form a pattern.

 

Ascending Broadening Wedge 

Wedges are a trend reversal pattern. Wedges form when the waves of an asset move within a narrowing range, angled either up or down. In the case of a wedge angled upwards—a "rising wedge.

The Rising Wedge is a bearish pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. In contrast to symmetrical triangles, which have no definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a bearish bias. I was reviewing the charts in our DP Chart Gallery as well as symbol requests and often referred to ascending triangle patterns and ascending wedge patterns. What's the Difference Between an Ascending Wedge and an Ascending Triangle? you show a "bullish rising triangle".which, visually appears to be the same as a "rising wedge" . 

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Falling Wedge

Rising wedge. The wedge pattern can be used as either a continuation or reversal pattern, depending on where it is found on a price chart. There are two types of wedge pattern: the rising (or ascending) wedge and the falling (or descending wedge). A rising wedge is a pattern with prices bouncing between two up-sloping and converging trendlines. Read for performance statistics, trading tactics, ID guidelines and more. Written by internationally known author and trader Thomas Bulkowski.

Unlike the rising wedge, the falling wedge is a bullish chart pattern. In this example, the falling wedge serves as a reversal signal. After a . Apr 12,  · Rising wedge patterns are bearish reversal patterns. ]n this article we will discuss how to trade the rising wedge pattern.5/5(5).

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