Falling Wedge Summary
A falling wedge is a bullish chart pattern indicating a potential reversal from a downtrend to an uptrend.
Characteristics:
Shape**: Two downward-sloping, converging trend lines.
Volume**: Decreases during pattern formation.
Breakout**: Confirmed when price breaks above the upper trend line, ideally with increased volume.
Types:
Reversal Falling Wedge**: Occurs after a downtrend, signaling a potential reversal to an uptrend.
Continuation Falling Wedge**: Occurs during an uptrend, indicating temporary consolidation before resuming the uptrend.
Trading Strategy:
Identify the Pattern**: Look for converging trend lines with lower highs and lower lows.
Wait for the Breakout**: Enter a trade when the price breaks above the upper trend line.
Stop-Loss Placement**: Below the lowest point of the wedge.
Target Price**: Measure the height of the wedge and add it to the breakout point.
Key Points:
Bullish Pattern**: Suggests a potential upward price movement.
Confirmation**: Breakout above the upper trend line, preferably with increased volume.
A falling wedge is a bullish chart pattern indicating a potential reversal from a downtrend to an uptrend.
Characteristics:
Shape**: Two downward-sloping, converging trend lines.
Volume**: Decreases during pattern formation.
Breakout**: Confirmed when price breaks above the upper trend line, ideally with increased volume.
Types:
Reversal Falling Wedge**: Occurs after a downtrend, signaling a potential reversal to an uptrend.
Continuation Falling Wedge**: Occurs during an uptrend, indicating temporary consolidation before resuming the uptrend.
Trading Strategy:
Identify the Pattern**: Look for converging trend lines with lower highs and lower lows.
Wait for the Breakout**: Enter a trade when the price breaks above the upper trend line.
Stop-Loss Placement**: Below the lowest point of the wedge.
Target Price**: Measure the height of the wedge and add it to the breakout point.
Key Points:
Bullish Pattern**: Suggests a potential upward price movement.
Confirmation**: Breakout above the upper trend line, preferably with increased volume.