ADAUSD is forming a falling wedge, a bullish continuation pattern. Supported strongly by the 20day moving average.
The falling wedge pattern occurs when the asset’s price is moving in an overall bullish trend before the price action corrects lower. Within this pullback, two converging trend lines are drawn, in blue. The consolidation part ends when the price action bursts through the upper trend line, or wedge’s resistance.
One of the key features of the falling wedge pattern is the volume, which decreases as the channel converges. Following the consolidation of the energy within the channel, the buyers are able to shift the balance to their advantage and launch the price action higher.
Hence there are three key characteristics of a falling wedge pattern:
- The price action temporarily trades in a downtrend (the lower highs and lower lows);
- There are two trend lines (the upper and lower) that are converging;
- There is a decrease in volume as the channel progresses.
The first two elements are mandatory features of a falling wedge, while the occurrence of the decreasing volume is very helpful as it adds additional legitimacy and validity to the pattern.
The falling wedge pattern is a technical formation that signals the end of the consolidation phase that facilitated a pullback lower. As outlined earlier, falling wedges can be both a reversal and continuation pattern. In essence, both continuation and reversal scenarios are inherently bullish.
As such, the falling wedge can be explained as the “calm before the storm”. The consolidation phase is used by the buyers to regroup and attract new buying interest, which will be used to defeat the bears and push the price action further higher.
Hence, a falling wedge is an important technical formation that signals that the correction, or consolidation, has just ended as the asset’s price left the wedge to the upside and, in most cases, the continuation of the overall trend is taking place.
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The falling wedge pattern occurs when the asset’s price is moving in an overall bullish trend before the price action corrects lower. Within this pullback, two converging trend lines are drawn, in blue. The consolidation part ends when the price action bursts through the upper trend line, or wedge’s resistance.
One of the key features of the falling wedge pattern is the volume, which decreases as the channel converges. Following the consolidation of the energy within the channel, the buyers are able to shift the balance to their advantage and launch the price action higher.
Hence there are three key characteristics of a falling wedge pattern:
- The price action temporarily trades in a downtrend (the lower highs and lower lows);
- There are two trend lines (the upper and lower) that are converging;
- There is a decrease in volume as the channel progresses.
The first two elements are mandatory features of a falling wedge, while the occurrence of the decreasing volume is very helpful as it adds additional legitimacy and validity to the pattern.
The falling wedge pattern is a technical formation that signals the end of the consolidation phase that facilitated a pullback lower. As outlined earlier, falling wedges can be both a reversal and continuation pattern. In essence, both continuation and reversal scenarios are inherently bullish.
As such, the falling wedge can be explained as the “calm before the storm”. The consolidation phase is used by the buyers to regroup and attract new buying interest, which will be used to defeat the bears and push the price action further higher.
Hence, a falling wedge is an important technical formation that signals that the correction, or consolidation, has just ended as the asset’s price left the wedge to the upside and, in most cases, the continuation of the overall trend is taking place.
***Make it Rain***
Stake your ADA to RAIN Stake Pool.
Rain is the stake pool for Cardano champions.
GLTA
