Note the spacing between each contact point the lines must be important otherwise it could be a pennant. – In 53% of cases, a pullback arises on the resistance – In 63% of cases, the goal of the pattern is reached once the support is broken – In 55% of cases, the rising wedge shows a reversal pattern – In 82% of cases, there will be a downward exit. Take a look at some statistics about the rising wedge: The target price is given by the lowest point that resulted in the formation of the wedge.īelow is a graph representing a rising wedge: This movement then has almost no buying power which will indicate the willingness of a bearish reversal. Volumes will then be at their lowest and constantly decrease as the waves. Another wave will be formed thereafter but prices will increase less and less at the contact with the support. The second wave of increase will then occur, however with lower amplitude, which may appear the weakness of buyers. The lowest will be reached during the first correction on the resistance of the wedge and will form the support. This one is identified by a continuous reduction of the amplitude of the waves. The pattern indicates the shortness of buyers. These lines must be touched at least twice for validation. To validate rising wedge there must be oscillation between the two lines. In order to avoid false breakouts, you should wait for a candle to close below the bottom trend line before entering.A bearish reversal pattern formed by two assembled upward slants is called a rising wedge. Once you have identified the rising wedge (whether in a uptrend or downtrend), one method you can use to enter the market with is to place a sell order (short entry) on the break of the bottom side of the wedge. The charts below show an example of a rising wedge pattern in a downtrend: It indicates the continuation of the downtrend and, again, this means that you can look for potential selling opportunities. 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. Identifying the rising wedge pattern in an downtrendĪ rising wedge in a downtrend is a temporary price movement in the opposite direction (market retracement). This means that you can look for potential selling opportunities. This indicates a slowing of momentum and it usually precedes a reversal to the downside. The price is confined within two lines which get closer together to create a pattern. As the chart below shows, this is identified by a contracting range in prices. Identifying the rising wedge pattern in an uptrendĪ rising wedge in an uptrend is considered a reversal pattern that occurs when the price is making higher highs and higher lows. This lesson shows you how to identify the rising wedge pattern and how you can use it to look for possible selling opportunities. There are two types of wedge pattern: the rising (or ascending) wedge and the falling (or descending wedge). The wedge pattern can be used as either a continuation or reversal pattern, depending on where it is found on a price chart.
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