After the steep decline in prices, there has been a consolidation phase and the formation of the wedge on the charts.Īfter the wedge has been formed, a sharp decline in prices can be seen again on the charts which are seen in continuation of the downtrend happening before the formation of the rising wedge. This can be seen in the picture posted below:Ī clear downtrend in prices of the security can be seen before the formation of the wedge in the chart. Hence, this forms an opportunity to take short positions in the market. ![]() This pattern is usually followed by a breakdown of the security price in the downside. This can be seen in shrinking prices within the two trend lines. It is formed when the price of the security makes higher highs and higher lows in comparison to the previous price movements in the given time period. Both the scenarios have been discussed at length below: Rising Wedge in Downtrend:Ĭontinuation of the existing trend: When a rising wedge pattern is spotted in a downtrend on a chart, it signifies the continuation of the previous trend. The picture posted below shows all the aspects of a rising wedge pattern:ĭepending on the location of the rising wedge pattern on a chart, it can signify two things. A breakdown of price from the lower trend line. ![]()
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