3/16/2024 0 Comments Ascending wedge in bear market![]() The rising wedge pattern is a bearish pattern, whether it forms after an established uptrend or during a downtrend, so the next time you spot this pattern on your favorite market exercise caution if you are holding a long position or prepare for an opportunity to get short. A target could again have been placed at the level where the rising wedge started from with a stop loss above the last higher high.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 above a previous swing high that was formed on the way down, before the support line was broken. A Falling Wedge is a bullish chart pattern that takes place in an upward trend, and the lines slope down. When you encounter this formation, it signals that forex traders are still deciding where to take the pair next. Wedges signal a pause in the current trend. This is also a picture-perfect example where price pulled back to the support line, retested it from below and dropped lower. It means that the magnitude of price movement within the Wedge pattern is decreasing. My final chart shows that same multi-year rising wedge that formed in AUD/USD but note that although price made higher highs that the momentum between each peak started slowing down, which is a behavior that these patterns tend to display. Traders Tip: When you are following a rising wedge in real-time, it can be a good idea to watch for momentum divergence on a MACD-Histogram between the higher highs, and use it as an additional confirmation method that a rising wedge might be nearing an end. A very important fact to bear in mind when trading the descending triangle is that it is very subjective. ![]() This section focuses on the descending broadening wedge pattern, which is typically a bullish pattern that appears in a downtrend market. Considered the opposite of the ascending triangle, this pattern is also known as the bearish triangle descending pattern. There are two types of broadening wedge patterns: ascending and descending. The ideal place to set a target will be at the lower level where the rising wedge started from, with a stop loss a few pips above the final high before the breakout occurred. On the other hand, a descending triangle breakout in the opposite direction becomes a reversal pattern. Just keep in mind though, that this may 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 lower support line from below before they will execute a short trade. Since the rising wedge is a bearish pattern, aggressive traders will typically wait for price to break below the lower support line before they will execute a short position. Practice This Strategy How to Trade the Rising Wedge Pattern
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