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Forex Trading

18

Apr
2023

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In Forex Trading

By sakiko

The Rising Wedge Or Ascending Wedge: All you Need to Know About It

On 18, Apr 2023 | No Comments | In Forex Trading | By sakiko

what is a rising wedge

It is a bearish chart formation commonly observed in technical analysis within the context of trading and investment. Opposite to rising wedge patterns, falling wedge patterns are typically a bullish wedge, which implies the price is likely to break through the upper line of the formation. Much like our discussion above on ascending wedges, this descending wedge pattern should display the inverse characteristics of volume and price action. Although many newbie traders confuse wedges with triangles, rising and falling wedge patterns are easily distinguishable from other chart patterns. They are also known as a descending wedge pattern and ascending wedge pattern.

what is a rising wedge

Next, you can proceed to place the stop loss above the new resistance level. In the example below, you will see where the price finds resistance (1) and an idea where you https://www.day-trading.info/ can place the stop-loss (2). In the example below, you will see the breakdown area (1), the short entry point (2), and the level at which you can place the stop-loss (3).

Falling Wedge – Descending Wedge

Notice how price action is forming new highs, but at a much slower pace than when price makes higher lows. In this first example, a rising wedge formed at the end of an uptrend. Trading financial products carries a high risk to your capital, particularly when engaging in leveraged transactions such as CFDs. It is important to note that between 74-89% of retail investors lose money when trading CFDs.

Recognizing and trading a rising wedge pattern involves identifying converging, upward-sloping trendlines during an uptrend (for reversal) or downtrend (for continuation). The pattern is confirmed when the price breaks below the lower support trendline, often accompanied by declining volume. Traders and investors generally use additional technical indicators for validation. The rising wedge pattern typically occurs after an uptrend and signals a potential reversal in the security’s price.

what is a rising wedge

The rising wedge pattern is commonly known as a bearish reversal pattern, but it can also act as a continuation pattern in certain market conditions. When it serves as a continuation pattern, it typically occurs during a downtrend rather than an uptrend. There is a strong bias about chart patterns and their interpretation in the technical analysis space. It is a very common belief that a rising wedge forms bearish sentiment and a falling wedge forms bullish sentiment.

Uptrends & Downtrends

There are 4 ways to trade wedges like shown on the chart (1) Your entry point when the price breaks the lower bound... We now have every sign that the rising wedge pattern is about to be completed. The actual end is when the support and resistance lines, constructed of pivot highs and lows, converge in a single point at the end of the figure. Are you ready to unlock the secrets of the rising wedge pattern in the thrilling world of forex trading?

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