A wedge is a price pattern marked by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price series over the course of 10 to 50 periods. The lines show that the highs and the lows are either rising or falling and differing rates, giving the appearance of a wedge as the lines approach a convergence. Wedge shaped trend lines are considered useful indicators of a potential reversal in price action
A bullish divergence occurs during a downtrend, when the price makes lower lows but the indicator makes higher lows. As price and momentum should move in the same direction, if the indicator fails to make a lower low this is a sign that the trend may reverse.
A bullish divergence occurs during a downtrend, when the price makes lower lows but the indicator makes higher lows. As price and momentum should move in the same direction, if the indicator fails to make a lower low this is a sign that the trend may reverse.