Description of the Wedge Patterns

Hi every one

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).


1-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 Pattern number one 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. It indicates the continuation of the downtrend and, again, this means that you can look for potential selling opportunities.


2-Falling wedge :
The falling (or descending) wedge can also be used as either a continuation or reversal pattern, depending on where it is found on a price chart. This lesson shows you how to identify the pattern and how you can use it to look for possible buying opportunities.

-Identifying the falling wedge pattern in a downtrend:
If the falling wedge appears in a downtrend, it is considered a reversal pattern. It occurs when the price is making lower highs and lower lows which form two contracting lines. The falling wedge usually precedes a reversal to the upside, and this means that you can look for potential buying opportunities.

-Identifying the falling wedge pattern in an uptrend:
A falling wedge found in an uptrend is considered a continuation pattern that occurs as the market contracts temporarily. It indicates the resumption of the uptrend. Again, this means that you can look for potential buying opportunities.


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For example { Rising wedge }

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For example { Falling wedge }

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