![]() ![]() 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. 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. This is also a picture-perfect example where price pulled back to the support line, retested it from below and dropped lower. To avoid confusion, you need to watch the behavior of the price once the pattern is completed. An ascending triangle has a flat top and a curved bottom, while a rising wedge has a sloping top and bottom. The forex 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. ![]() The shape of the two patterns is also different. 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. An ascending triangle has a bullish direction, while a rising wedge has a bearish direction. 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. 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. 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. The best thing to trade in an ascending triangle is to wait for a breakout. In ascending triangle breakout may result in an uptrend. It is important to look for breakouts and pullbacks. Practice This Strategy How to Trade the Rising Wedge Pattern When trading for a rising wedge, consider the bottom line as a resistance line or signal line. ![]()
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