RISING WEDGE PATTERN SUCCESS RATE HOW TO
RISING WEDGE PATTERN SUCCESS RATE SERIES

The pattern typically occurs after an extended price move up or down, and the price action “fans out” from the starting point, creating the shape of a broadening wedge.

RISING WEDGE PATTERN SUCCESS RATE SERIES

The pattern is formed by two diverging trend lines that connect a series of price peaks and troughs.īroadening wedges can be observed in different variations, such as ascending, descending, tops, and bottoms. It is considered a bilateral chart pattern, which means that it can signal both bullish and bearish market situations. The broadening wedge pattern is a unique chart pattern that traders can use to identify potential breakouts and short-term trend reversals. Broadening Wedge Pattern Understanding Broadening Wedge Pattern This pattern can take on various forms, such as sideways or ascending and descending fashions, offering a wide range of potential trade setups for traders to capitalize on and manage risk. In trading, the broadening wedge pattern can provide valuable insight into the exhaustion of buyers or sellers within a market, presenting traders with opportunities to identify potential trend reversals and implement effective trading strategies. Conversely, a descending broadening wedge demonstrates a downward leaning channel, indicating a potential bullish reversal.

It is formed by two diverging bullish lines, with the pattern being confirmed upon observing good oscillation between these two upward lines. The key characteristic of the broadening wedge pattern is the expanding price fluctuation, which is indicative of increasing price volatility.Īn ascending broadening wedge is a specific type of this pattern, where the widening channel leans upward and is considered a bearish signal. This pattern is often referred to as a megaphone pattern due to its shape, featuring two lines – one ascending and one descending – that diverge from each other. The falling wedge is a bullish pattern, whether it forms after an established downtrend or during an uptrend, so the next time you spot this pattern on your favorite market exercise caution if you are holding a short position or prepare for an opportunity to get long.The broadening wedge pattern is a chart pattern recognized in technical analysis, used by traders and analysts to predict the potential future price movements within a specific financial market. A target could again have been placed at the level where the rising wedge started from with a stop loss below the final lower low.Īlways make sure that your potential reward is larger than the risk you are taking on and if your stop loss ends up being too far away, then consider placing your stop below a previous swing long that was formed on the way up before the resistance line was broken. That being said, there was additional confirmation that this falling wedge was about to end when the MACD-Histogram started picking up momentum divergence between the lower lows at the support line.Īlso note how momentum increased dramatically once price broke above the resistance line, which signaled an end to the pattern. This is a great example where conservative traders would not have had an opportunity to enter if they waited for a retest of the breakout level. My final chart shows the same falling wedge in Gold that led to a trend continuation when it ended. This occurrence does not necessarily always happen but is another confirmation signal to look out for since the MACD-Histogram also showed a wedge-like formation. Note that the example above also shows a decline in the MACD-Histogram’s peaks before the patter ends. Once this pattern ends there will usually be an increase in momentum once price breaks above the resistance line. Traders Tip: When you are following a falling wedge in real-time, it can be a good idea to watch for momentum divergence on a MACD-Histogram between the lower lows, and use it as an additional confirmation method that a falling wedge might be nearing an end. The ideal place to set a target will be at the upper level where the falling wedge started from, with a stop loss a few pips below the final low before the breakout occurred. Just keep in mind though, that a retest of the breakout level might not always happen and result in a trader missing an entry. Conservative traders, on the other hand, will generally wait for price to retest the upper resistance line from above before they will execute a long trade.

RISING WEDGE PATTERN SUCCESS RATE HOW TO

Practice This Strategy How to Trade the Falling Wedge Patternīecause the falling wedge is a bullish chart pattern, aggressive traders will typically wait for price to break above the upper resistance line before they will execute a long position.

Rising wedge pattern success rate