Wedge patterns can indicate both continuation of the trend as well as reversal.
Rising Wedge- On the left upper side of the chart, you can see a .
Rising usually form during an uptrend and it is denoted by the formation higher highs( HHs ) and Higher Lows( HLs ).
This pattern gives traders the opportunity to take short positions in the market.
When price breaks out of the lower (TL) of the , a trader can execute a short position.
Falling Wedge - On the left lower side of the chart, you can see a .
Falling when formed during a downtrend is a reversal pattern and it denoted by the formation of lower lows(LLs)
and lower highs(LHs).
If you notice this pattern during a downtrend, it usually indicates that the downtrend is losing momentum and buyers
are stepping into the market gradually.
When price breaks out of the upper TL, one can execute a buy trade.
On the right side, you can see the recent EUR/USD chart. The pattern in this particular chart is the Broadening Wedge
Traders can trade this pattern by taking short positions whenever price action takes place in the upper TL of the .
On the other hand, buy trades can be executed on the lower of the .