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Rising wedge candlestick pattern

Rising wedge candlestick pattern occurs when a security’s price has been rising over time, but it can occur in the midst of a downward trend as well. The trend lines are drawn above and below the price chart pattern can converge to help a trader anticipate a breakout reversal. The price can be out of the trend line. The wedge patterns have a tendency to break in the opposite direction from the trend lines. The pattern will indicate the potential of falling price after a breakout of the lower trend line. Traders make bearish trades after the breakout by selling the security short as futures depending on the security being charted.

The pattern holds three characteristics as converging trend lines, pattern of declining volume as price progresses through the pattern and breakout from one of the trend lines. The form wedge pattern is a rising wedge or falling wedge.

Falling Wedge

When a security price falls over time wedge the pattern occurs as the trend final downward moves. The trend lines can be drawn above the highs and below the lows on the price chart pattern. It can converge as the price slide loses momentum. The buyers step in to slow the rate of decline before the lines converge price may breakout above the upper trend line. When price breaks the upper trend line the security is expected to reverse and the trend goes higher. Traders identify bullish reversal signals that would look for trades that benefit from the security rise in price.

Trading Advantages for Wedge Pattern

Wedge patterns converge in smaller price channel, the distance between the prices on the entry of the trade. The price for a stop loss is smaller than the start of the pattern. The stop loss can be placed close by at the time the trade begins, and if the trade is successful.

Breakdown

The experienced traders love this pattern that once breakdown happens as the target is reached quickly. Where a confirmation must be shown before a trade is taken, wedges do not need confirmations; they normally break and drop fast to their targets. Targets are usually located at the beginning of the upper trend line, where the trendline is connected.
Stop Loss:-The stop-loss can be placed at the upper side of the rising wedge line.
Price Target:-The price target is same as the height of the wedge back.
Stop Loss:-The Stop-loss can be placed at the bottom side of the falling wedge line.

Wedge Trading Strategy Rule

The longer the market consolidates between the upper and lower limits of the falling wedge pattern and the symmetrical wedge pattern as higher the odds of a breakout happening sooner rather than later. So focus on the falling wedge pattern because it has the potential of outstanding profits. Then wait until you can Spot on the Price Chart the Structure of a Falling Wedge Pattern and Draw the two trendlines that connect the highs and the lows. We buy when break and Close above the Downward Resistance Trendline. Take profit once we Break Above of the Origins of the Falling Wedge Pattern. Then place the protective sl below the last swing low before the Breakout.

Summary

They use the pattern to realize what is developing until after the breakout. The psychology is that as the price action narrows down the buyers become more aggressive while the sellers don’t have enough power to continue pressing down the paddle. If you compress an object hard enough after it reached a maximum level of compression it will snap back hard. The principle is applied to the falling wedge pattern as a reason to make substantial profits.