Therefore, before trading with the rising wedge pattern, you must consider its pros and cons. There are multiple pros and cons of each pattern, which help the trader identify the best pattern for themselves.
The Pros and Cons of the Rising Wedge Pattern It helps in giving the trader a positive ratio of risk and reward in all cases. Once it is identified, you can quickly locate the stop level for the trader. The stop level is identified from the top point of the pattern on the trending line of resistance. The two common ways of making an entry are either by waiting for a candle below the point of support trend before making an entry or entering the short position just when the support line is broken by the price irrespective of the candle close. There can be an entry point once the trend support line has been breached on the rising wedge. This is also referred to as divergence, which signifies that the uptrend movement is almost finished. One can observe the uptrend pattern by employing the volume tool on the chart that points at a fading volume in link to the ascending price prevalent in the market. Let’s consider the rising wedge pattern occurring as a continuation. Keep an eye on the break occurring under the support point for making a short entryĪ rising wedge reversal pattern identification:Ī rising wedge pattern can be observed both as a continuation and a reversal pattern, as has been mentioned already.Confirmation of the overbought signals by using technical tools such as oscillators.Look for the divergence among price and volume by employing the volume function (You can use MACD as well).A link of the lower lows and higher highs with the help of the trend line that forms towards the narrow point.The formation of a rising wedge consolidation can be observed.In both these cases, there are different measures of identification that must be kept in mind.Ī rising wedge continuation pattern identification: There can be doubts in identifying the pattern owing to its possible interpretation as both a bearish continuation and a bearish reversal pattern. Identification of the Rising Wedge Pattern While Trading The falling wedge can be seen descending downwards in the middle of the two converging trend lines, finally reaching the apex point, which identifies the bullish pattern. A falling or a descending wedge pattern is majorly distinguished from the rising wedge pattern by a slant of the triangle. To quickly identify the rising wedge pattern, you must also know how the falling wedge pattern appears. However, irrespective of the position of this trend, you must keep in mind that this trend is always bearish. It is possible to ascertain the reversal and continuation patterns from the bearish chart formation based on the location and the ongoing trend. Potential setup - Look for potential reversal at the key levels.The rising wedge pattern also referred to as the ascending wedge, is a price pattern that comes into formation when the price is bound in the middle of two upward rising trend lines. Watch my market analysis video in the last session if you haven’t in order to better relate to the market recap and the trade review.īias - neutral (Day trading) bullish (long term)
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