Ascending Broadening Wedges

This is a good indication that supply is entering as the stock makes new highs. A good way to read this price action is to ask yourself if the effort to make new highs matches the result. This is also a picture-perfect example where price pulled back to the support line, retested it from below and dropped lower. A target could again have been placed at the level where the rising wedge started from with a stop loss above the last higher high.

Tall and wide patterns work better than short and narrow patterns. For more information on this pattern, read
Encyclopedia of Chart Patterns,
pictured on the right. During the pattern’s formation, there are a few indicators that can be used to determine whether the pattern is a real pattern or a disguise. As with everything you do while trading the Forex market, it’s important that you track your results both good and bad. Although I don’t know anything about you or the way you trade, I would be willing to bet that you’re overtrading. As you can see, there was a key horizontal level that was just a few pips higher than the 93 pip objective.

Ascending Broadening Wedge: Important Bull Market Results

Research does suggest that wedge patterns reveal consistent indicators, though there is no single guaranteed signal for entry or exit. In this article, we go over the rising wedge pattern and apply it to a historical case to illustrate its use. While the example is taken from the past, the mechanics of how to identify and trade this pattern remain the same today. The price broke the resistance line of the formation at the $900 price level. Then, it continued rising by making bullish continuation patterns such as ABCD patterns.

Right-Angled Broadening Wedges come in two varieties, ascending and descending. With the Descending Broadening Wedge formation we are looking for two touches to each trendline. The Descending Broadening Wedge is similar to the Ascending Broadening Wedge pattern and https://g-markets.net/ the descending variety of wedge broadens downwards. The second indication is to look for how far the retrace has advanced from the beginning of the downtrend. If the move has advanced well above the 50% Fibonacci level, this pattern might not be a valid pattern.

What Is an Ascending Wedge Stock Pattern?

In a rising wedge, both boundary lines slant up from left to right. Although both lines point in the same direction, the lower line rises at a steeper angle than the upper one. Prices usually decline after breaking through the lower boundary line. As far as volumes are concerned, they keep on declining with each new price advance or wave up, indicating that the demand is weakening at the higher price level. A rising wedge is more reliable when found in a bearish market.

Pullback opportunities are great for adding to or initiating positions while trading. In this post, we’ll show you a handful of ways to qualify a healthy… Over time, you should develop a large subset of simulated trades to know your probabilities and criteria for success before you put real money to work. These two positions would have generated a total profit of 80 cents per share by JPM. Above is a daily chart of Google and a 10-minute chart of Facebook showing the exact trigger for entering a position.

Bulkowski on the Ascending Broadening Wedge

Traders identifying bullish reversal signals would want to look for trades that benefit from the security’s rise in price. If we compare broadening wedges, they are the flip side of regular wedges. In a regular wedge, the upper and lower lines of the formation converge, while in the broadening version, they diverge.

The ideal place to set a target will be at the lower level where the rising wedge started from, with a stop loss a few pips above the final high before the breakout occurred. A rising wedge formed after an uptrend usually leads to a REVERSAL (downtrend) while a rising wedge formed during a downtrend typically results in a CONTINUATION (downtrend). The price action is moving lower until a point when it creates a third in the series of the lower lows. Afterwards, the buyers start pushing the price again higher, creating a rising wedge. After the trendlines are formed, as soon as price touches the upper trendline go short.

Broadening Wedge Patterns Guide (PDF)

The NZDUSD chart below illustrates where I set my take profit and why. First up is the NZDUSD 1-hour chart that I presented at the beginning of this lesson. Now, if you need more evidence before pulling the trigger, simply wait for a retest of the broken level before considering an entry.

Not only does it take patience to spot a favorable pattern, but it also takes an extra dose of patience to wait for the pattern to confirm and secure a good entry. We collect, retain, and use your contact information rising broadening wedge pattern for legitimate business purposes only, to contact you and to provide you information & latest updates regarding our products & services. We do not sell or rent your contact information to third parties.

Trading In Ascending Broadening Wedge

On that note, when it comes to the Forex market, I’ve noticed that the broadening wedge develops at the upper end of a range far more often than at the bottom. While it can be extremely profitable if correctly executed, it can easily play tricks on you if you aren’t careful. When the price breaks through the lower line, it usually has a steep and uninterrupted fall-through.

• Note in these cases, the falling and the rising wedge patterns have a reversal characteristic.
• This creates a series of higher interim peaks in price and lower interim lows.
• Give this combination a try the next time you come across a one of these formations.

As you can see, the price came from a downtrend before consolidating and sketching higher highs and even higher lows. Choosing between these two options depends on your risk tolerance and overall trading approach. Deepen your knowledge of technical analysis indicators and hone your skills as a trader.

Which Wedges Are Bullish?

Instead, we’re entering short as soon as we have a confirmed breakout. But before we get into the entry strategy and stop loss placement, let’s outline the attributes of this particular structure. The image below illustrates the characteristics of the formation. While it is a consolidation pattern, it doesn’t represent what we often refer to as “healthy” consolidation. Instead, it signals that buyers or sellers are becoming exhausted and that a reversal of some sort is the likely outcome.