Day Trading Series

Chart Pattern: Wedge Pattern

The Wedge pattern can either be a continuation pattern or a reversal pattern, depending on the type of wedge and the preceding trend. There are 2 types of wedges indicating price is in consolidation. The first is rising wedges where price is contained by 2 ascending trend lines that converge because the lower trend line is steeper than the upper trend line. In other words: the lows are climbing faster than the highs. These wedges tend to break downwards. The second is Falling wedges where price is contained by 2 descending trend lines that converge because the upper trend line is steeper than the lower trend line. In other words: the highs are falling faster than the lows. These wedges tend to break upwards.

Conservative traders may look for additional confirmation of price continuing in the direction of the breakout. The target can be estimated through the technique of measuring the height of the back of the wedge and extending it in the direction of the breakout. A common stop level is just outside the wedge on the opposite side of the breakout.

This is the second pattern of the series. Wedges, its a good pattern to follow to see when something my take a dip and when something might be ready to uptrend to get in for a trade to make some money. You can make some good money daying trading and being able to read these patterns will take you to the next level. Stay toned for more pattern information.

source: https://www.tradingview.com/ideas/wedgepattern/