I see many many patterns forming on ETH currently, a rising wedge is one of many patterns i see playing out. Personally, i would love for this to breakout to the upside, but rising wedges usually break downwards.
This pattern is formed because of tug of war between the two great forces which move the price up and down, that is demand and supply.
These are pressure areas in a down trend where bulls are stronger than bears in the beginning, but become weaker than bears at the end of the pattern. These are target areas where some traders buy at support or bearish traders book profit at a target, while most traders are bearish and selling.
As the target area is approached there is increased buying. As the demand increases the price rallies up. As the price rises substantially it becomes an opportunity for the bears to sell the stock at higher level This creates a swing top and the price falls down.
As the price falls down those who wanted to buy early but failed to do so, think that now is the opportunity to buy. This increases the demand and the price goes up creating a swing bottom.
This drama continues to create higher high swing highs and higher high swing lows which appear to be bullish . This is an apparent but minor trend reversal. But the strong bearish under current is expressed in the fact that each subsequent range diminishes in size indicating decrease in the momentum of price rise.
These contracting ranges (diminishing ranges) with reduced volume gives us the clue that the apparent up trend is loosing steam. So it is not a classical up trend. But a corrective rally in a downtrend. So be prepared for the downward break out in the direction of the previous trend.
If subsequent higher high swing highs are joined and extended we get up sloping trend line which forms the upper border of the wedge . Like wise if subsequent higher high swing lows are joined and extended we get up sloping trend line which forms the lower border of the wedge .
These two trend lines if extended join on right side. This completes the formation of Rising Wedge .
The slope of the upper resistance trend line is less steeper than the slope of the lower support trend line . This also indicates that the bullish force is less stronger than underlying bearish force.
After all the buying is exhausted the bearish activity becomes apparent. When the last range becomes smaller than all the ranges, the price breaks out of the rising wedge pattern towards the down side. Thus the down trend resumes and continues.
This pattern is formed because of tug of war between the two great forces which move the price up and down, that is demand and supply.
These are pressure areas in a down trend where bulls are stronger than bears in the beginning, but become weaker than bears at the end of the pattern. These are target areas where some traders buy at support or bearish traders book profit at a target, while most traders are bearish and selling.
As the target area is approached there is increased buying. As the demand increases the price rallies up. As the price rises substantially it becomes an opportunity for the bears to sell the stock at higher level This creates a swing top and the price falls down.
As the price falls down those who wanted to buy early but failed to do so, think that now is the opportunity to buy. This increases the demand and the price goes up creating a swing bottom.
This drama continues to create higher high swing highs and higher high swing lows which appear to be bullish . This is an apparent but minor trend reversal. But the strong bearish under current is expressed in the fact that each subsequent range diminishes in size indicating decrease in the momentum of price rise.
These contracting ranges (diminishing ranges) with reduced volume gives us the clue that the apparent up trend is loosing steam. So it is not a classical up trend. But a corrective rally in a downtrend. So be prepared for the downward break out in the direction of the previous trend.
If subsequent higher high swing highs are joined and extended we get up sloping trend line which forms the upper border of the wedge . Like wise if subsequent higher high swing lows are joined and extended we get up sloping trend line which forms the lower border of the wedge .
These two trend lines if extended join on right side. This completes the formation of Rising Wedge .
The slope of the upper resistance trend line is less steeper than the slope of the lower support trend line . This also indicates that the bullish force is less stronger than underlying bearish force.
After all the buying is exhausted the bearish activity becomes apparent. When the last range becomes smaller than all the ranges, the price breaks out of the rising wedge pattern towards the down side. Thus the down trend resumes and continues.
Trade closed: target reached:
Target reached, cheers