The more number of times it tests the trend lines, the stronger is the pattern signal. The strength of the wedge is judged by how many time the price movement tests the support and resistance trend line.The falling wedge pattern is considered complete, when the price breaks out above the top trend line, i.e., buyers have taken control of the security.The rising wedge pattern is considered complete, when the price breaks out below the bottom trend line, i.e., the sellers have taken control.It can be used to enter a long position or to add to an existing long. It often shows the end of a downtrend and the beginning of an uptrend. In the falling wedge the upper trend line (the resistance), has a greater slope than the bottom trend line (the support). The falling wedge is a strong bullish reversal pattern.The opposite is the case for rising wedges, i.e., it is bearish in nature. A falling wedge is bullish in nature signaling a reversal of trend from downtrend to uptrend.Some of the important characteristics of the wedge pattern are listed below: A falling wedge is formed during a downtrend, and is used to predict the price movement from a downtrend to an uptrend. An upward sloping wedge is known as Rising wedge, while the downward sloping wedge is known as Falling wedge.Ī rising wedge is formed during an uptrend, and is used to predict the price movement from an uptrend to a downtrend. During the time of the formation, the prices oscillate up and down between a range, and this price range keeps reducing. It is characterized by a gradually contracting range of security price in an upward or a downward direction. The wedge pattern is a commonly found pattern in security prices. This pattern can be seen as a consolidation of an existing uptrend and is often viewed as a bullish sign. It is characterized by two converging trendlines that slope downwards, creating a wedge shape on the chart. In this article, we will discuss the two popular reversal patterns, namely, Rising and Falling Wedge. A Bullish Falling Wedge is a Chart Pattern that indicates an uptrend in the stock market. In the Chart Patterns Overview, we discussed that reversal chart patterns signal the ending on an ongoing trend, i.e., they signify a reversal of asset’s price direction.
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