With descending wedges, the upper and lower trendlines are drawn by connecting the lower highs and lower lows to form the familiar wedge shape. Both the upper resistance and lower support lines also converge as price moves lower in a narrowing range. The descending wedge pattern, also known as a falling wedge, typically appears at the end of a bearish market before a strong bullish breakout occurs. Here also, the trendlines started to converge as price moved higher within a narrowing range towards the end of the pattern.īoth of the above ascending wedge pattern examples formed prior to strong bearish reversals, which is why traders will seek to make a profit on the assumption that prices will fall when this pattern ends. The next chart example shows an ascending wedge pattern that formed during a downtrend. The narrowing range toward the end of this bull run signalled that the upward momentum was decreasing and that a strong reversal might occur at any moment. ![]() To draw the upper resistance and lower support lines, technical analysts will connect the higher highs and higher lows with trendlines to see whether price is contracting within a narrowing range as price moves higher. The chart example above shows two converging trendlines (orange lines) that were drawn above and below the price structure of a market during the final phases of an uptrend, revealing what an ascending wedge pattern looks like. ![]() ![]() The ascending wedge, also known as a rising wedge, can be seen as a bearish reversal pattern that can either form after a market has been trending higher over time or during a corrective phase in a downtrend.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |