![]() ![]() 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. Ascending Triangle: An ascending triangle is a bullish chart pattern used in technical analysis that is easily recognizable by the right triangle created by two trend lines. This is also a picture-perfect example where price pulled back to the support line, retested it from below and dropped lower. ![]() 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. Ascending wedges can occur when a market is rising or falling: When a market is in an uptrend, they’re a sign that traders are reconsidering the bull move. 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. Example: Rising Wedge (Ascending Wedge) in Uptrend: The chart below presents an example of the Rising Wedge pattern in the Dow Jones Industrial Average (DJI) monthly wave that started on Decemat 21,712.53 and reached 29,568.57 on February 12, 2020, making more than 36 gain in less than fourteen months. 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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