{"id":9632,"date":"2022-10-12T08:25:22","date_gmt":"2022-10-12T08:25:22","guid":{"rendered":"https:\/\/mdr.foobrdigital.com\/?p=9632"},"modified":"2022-10-12T08:25:22","modified_gmt":"2022-10-12T08:25:22","slug":"how-to-trade-wedge-chart-patterns","status":"publish","type":"post","link":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/2022\/10\/12\/how-to-trade-wedge-chart-patterns\/","title":{"rendered":"How to Trade Wedge Chart Patterns"},"content":{"rendered":"\n

In a Wedge chart pattern, two\u00a0trend lines\u00a0converge<\/em>.<\/p>\n\n\n\n

It means that the magnitude of price movement within the Wedge pattern is decreasing.<\/p>\n\n\n\n

Wedges signal a pause<\/strong> in the current trend.<\/p>\n\n\n\n

When you encounter this formation, it signals that\u00a0forex\u00a0traders are still deciding where to take the pair next.<\/p>\n\n\n\n

A Falling Wedge is a bullish<\/strong> chart pattern that takes place in an upward trend, and the lines slope down<\/em>.<\/p>\n\n\n\n

A Rising Wedge is a bearish<\/strong> chart pattern that\u2019s found in a downward trend, and the lines slope up<\/em>.<\/p>\n\n\n\n

Wedges can serve as either continuation<\/strong> or reversal<\/strong> patterns.<\/p>\n\n\n\n

Rising Wedge<\/h2>\n\n\n\n

A rising wedge<\/strong> is formed when the price consolidates between upward sloping support and resistance lines.<\/p>\n\n\n\n

Here, the slope of the support line is steeper than that of the resistance.<\/p>\n\n\n\n

This indicates that higher lows are being formed faster than higher highs. This leads to a wedge-like formation, which is exactly where the chart pattern gets its name from!<\/p>\n\n\n\n

With prices consolidating, we know that a big splash is coming, so we can expect a breakout to either the top or bottom.<\/p>\n\n\n\n

If the rising wedge forms after an uptrend, it\u2019s usually a bearish reversal pattern.<\/p>\n\n\n\n

On the other hand, if it forms during a downtrend, it could signal a continuation of the down move.<\/p>\n\n\n\n

Either way, the important thing is that, when you spot this forex trading chart pattern, you\u2019re ready with your entry orders!<\/p>\n\n\n\n

\"Rising<\/figure>\n\n\n\n

In this first example, a rising wedge formed at the end of an uptrend.<\/p>\n\n\n\n

Notice how price action is forming new highs<\/strong>, but at a much slower pace<\/strong> than when price makes higher lows.<\/p>\n\n\n\n

\"Trading<\/figure>\n\n\n\n

See how price broke down to the downside? That means there are more forex traders desperate to be short than be long!<\/p>\n\n\n\n

They pushed the price down to break the trend line, indicating that a downtrend may be in the cards.<\/p>\n\n\n\n

Just like in the other forex trading chart patterns we discussed earlier, the price movement after the breakout is approximately the same magnitude as the height of the formation.<\/p>\n\n\n\n

Now let\u2019s take a look at another example of a\u00a0rising wedge formation. Only this time it acts as a\u00a0bearish continuation signal<\/strong>.<\/p>\n\n\n\n

\"Rising<\/figure>\n\n\n\n

As you can see, the price came from a downtrend before consolidating and sketching higher highs and even higher lows.<\/p>\n\n\n\n

\"Rising<\/figure>\n\n\n\n

In this case, the price broke to the downside and the\u00a0downtrend\u00a0continued. That\u2019s why it\u2019s called a continuation signal yo!<\/p>\n\n\n\n

See how the price made a nice move down that\u2019s the same height as the wedge?<\/p>\n\n\n\n

What did we learn so far about these Japanese candlestick chart patterns?<\/p>\n\n\n\n

A rising wedge formed after an uptrend usually leads to a REVERSAL (downtrend) while a rising wedge formed during a downtrend typically results in a CONTINUATION (downtrend).<\/p>\n\n\n\n

Simply put, a rising wedge leads to a downtrend, which means that it\u2019s a bearish chart pattern!<\/p>\n\n\n\n

Falling Wedge<\/h2>\n\n\n\n

Just like the rising wedge, the falling wedge<\/strong> can either be a reversal or continuation signal.<\/p>\n\n\n\n

As a reversal signal, it is formed at a bottom of a downtrend, indicating that an uptrend would come next.<\/p>\n\n\n\n

As a continuation signal, it is formed during an uptrend, implying that the upward price action would resume. Unlike the rising wedge, the falling wedge is a bullish chart pattern.<\/p>\n\n\n\n

\"Falling<\/figure>\n\n\n\n

In this example, the falling wedge serves as a reversal signal. After a downtrend, the price made lower highs and lower lows<\/strong>.<\/p>\n\n\n\n

Notice how the falling trend line connecting the highs is steeper than the trend line connecting the lows.<\/p>\n\n\n\n

\"Falling<\/figure>\n\n\n\n

Upon breaking above the top of the wedge, the pair made a nice move upwards that\u2019s approximately equal to the height of the formation. In this case, the price rally went a few more pips beyond that target!<\/p>\n\n\n\n

Let\u2019s take a look at an example where the falling wedge serves as a continuation signal.<\/p>\n\n\n\n

Like we mentioned earlier, when the falling wedge forms during an uptrend, it usually signals that the trend will resume later on.<\/p>\n\n\n\n

\"Falling<\/figure>\n\n\n\n

In this case, the price consolidated for a bit after a strong rally. This could mean that buyers simply paused to catch their breath and probably recruited more people to join the bull camp.<\/p>\n\n\n\n

Hmm, it looks like the pair is revving up for a strong move. Which way would it go?<\/p>\n\n\n\n

\"Falling<\/figure>\n\n\n\n

See how the price broke to the top side and went on to climb higher?<\/p>\n\n\n\n

If we placed an entry order above that falling trend line connecting the pair\u2019s highs, we would\u2019ve been able to jump in on the strong uptrend and caught some pips!<\/p>\n\n\n\n

A good upside target would be the height of the wedge formation.<\/p>\n\n\n\n

If you want to go for more pips, you can lock in some profits at the target by closing down a portion of your position, then letting the rest of your position ride.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a Wedge chart pattern, two\u00a0trend lines\u00a0converge. It means that the magnitude of price movement within the Wedge pattern is decreasing. Wedges signal a pause in the current trend. When you encounter this formation, it signals that\u00a0forex\u00a0traders are still deciding where to take the pair next. A Falling Wedge is a bullish chart pattern that takes place in an […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[807],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9632"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9632"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9632\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}