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Rising wedge pattern bull market12/3/2023 ![]() You will also see decreasing volume throughout the consolidation period, as traders become uncertain of the direction of the market. You will see this pattern occur frequently during major uptrends, as the market consolidates before continuing its upward movement. It may slope up or even look horizontal, but it often slopes against the leading trend. It's important to note that the pennant doesn't necessarily slope down. This formation often has a slight downward slope, and the price action moves in a narrowing range between the two trend lines. ![]() The bull pennant stock pattern is made up of two converging trendlines, with the lower trendline representing support, and the upper trendline representing resistance. When this happens, you can expect a continuation of the previous uptrend. This indicates that the momentum is starting to pick up again, and that more buyers are stepping in to take over the market. The breakout from the pennant to the upside occurs when the price action begins to rise, and eventually breaks up through the top trendline. It represents a pause in the upward momentum, where traders take a break to re-evaluate the current market situation. You will see this formation when prices stall out and start moving sideways after a strong uptrend. The pennant shape is created by the price gradually decreasing as it moves from the high of the flagpole to the low of the consolidation period. It is created by a sharp increase in price, followed by a period of consolidation. The flagpole is the vertical distance between the highest peak and lowest trough. It consists of two parts: a flagpole and a pennant. The limit in this example was taken from the previous swing low giving this trade an extremely positive risk-reward ratio.A bull pennant pattern is a bullish continuation pattern that appears on a stock chart as a down-sloping triangular flag. This identification point makes it relatively simple to locate the stop level for novice traders. The stop level as highlighted on the chart is elected from the high point of the rising wedge located on the resistance trend line. Enter into the short position as soon as the price breaks the support line, regardless of the candle close.Wait for a candle close below the support trend line before entry. ![]() The entry point (labelled) occurs once the trend support line of the rising wedge has been breached. This is known as divergence, showing that the upward movement is coming to an end. Confirmation of the uptrend waning in strength can be seen using the volume tool on the chart which depicts fading volume in concurrence with the ascending price in the market. The rising wedge is outlined by the blue dashed lines showing diminishing bull strength in the uptrend. The chart above shows a rising wedge ‘continuation’ pattern after a determined downtrend. The example below shows the formation of a rising wedge on a forex pair depicting a continuation.ĮUR/USD rising wedge forex chart pattern: The rising wedge forex pattern is linked with both continuation and reversal patterns as mentioned above. ![]() Look for break below support for short entry.Overbought signal can be confirmed by other technical tools like oscillators.Confirm divergence between price and volume using volume function – MACD may also be used.Linking higher highs and lower lows using a trend line assembling towards a narrowing point.Both scenarios contain a different set of observation dynamics which must be taken into consideration. The rising wedge pattern is interpreted as both a bearish continuation and bearish reversal pattern which gives rise to some confusion in the identification of the pattern. ![]() How to identify a Rising Wedge Pattern on Forex Charts The falling wedge declines downwards between two converging trend lines to reach an apex point which is respected as a bullish pattern (see image below). The falling (descending) wedge differentiates itself from the rising wedge by the slant of the triangle. Regardless of where the rising wedge appears, traders should always maintain the guideline that this pattern is inherently bearish in nature (see image below). It is considered a bearish chart formation which can indicate both reversal and continuation patterns – depending on location and trend bias. The forex rising wedge (also known as the ascending wedge) pattern is a powerful consolidation price pattern formed when price is bound between two rising trend lines. ![]()
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