What is Rising Wedge pattern and how to trade with that?
The Rising Wedge (also known as the ascending wedge) pattern is a powerful consolidation price pattern formed when price is bound between two rising trend lines. It is considered a bearish chart formation which can indicate both reversal and continuation patterns – depending on location and trend bias. Regardless of where the rising wedge appears, traders should always maintain the guideline that this pattern is inherently bearish in nature (see image).
HOW TO IDENTIFY A RISING WEDGE PATTERN ON CHARTS
The rising wedge pattern is interpreted as both a bearish continuation and bearish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain a different set of observation dynamics which must be taken into consideration.
Reversal Pattern:
Established uptrend
Rising wedge consolidation formation
Linking higher highs and higher lows using a trend line assembling towards a narrowing point
Look for break below support for short entry
Continuation Pattern:
Established downtrend
Rising wedge consolidation formation
Linking higher highs and higher lows using a trend line assembling towards a narrowing point
Look for break below support for short entry
How to trade with this:
*Entry Point: Right after the candlestick breakout of the support.
*Stop-Loss: At the highest resistance level of the Wedge pattern.
*Take-Profit: From the entry point, the distance is equal to the maximum width (H) of the rising wedge pattern.
This is the academic shape of this pattern, in the future we will publish Falling Wedge pattern 📚 . Please follow our page to be informed as soon as the materials are published.
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HOW TO IDENTIFY A RISING WEDGE PATTERN ON CHARTS
The rising wedge pattern is interpreted as both a bearish continuation and bearish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain a different set of observation dynamics which must be taken into consideration.
Reversal Pattern:
Established uptrend
Rising wedge consolidation formation
Linking higher highs and higher lows using a trend line assembling towards a narrowing point
Look for break below support for short entry
Continuation Pattern:
Established downtrend
Rising wedge consolidation formation
Linking higher highs and higher lows using a trend line assembling towards a narrowing point
Look for break below support for short entry
How to trade with this:
*Entry Point: Right after the candlestick breakout of the support.
*Stop-Loss: At the highest resistance level of the Wedge pattern.
*Take-Profit: From the entry point, the distance is equal to the maximum width (H) of the rising wedge pattern.
This is the academic shape of this pattern, in the future we will publish Falling Wedge pattern 📚 . Please follow our page to be informed as soon as the materials are published.
Thank you all for supporting our activity with Likes 👍 and Comments ❤️