Global Market Astro takes its privilege in explaining the
commonly observed chart pattern i.e. The Wedge in this blog. Hope it gives a
greater understanding to the readers and aids them in stock
market trend analysis
THE
WEDGE
The wedge is a type of chart pattern that signals the
reversal of trend which gets formed within the wedge. These wedges serve as a
chart pattern tool in stock
market forecast. The wedges are similar to that of the
Symmetrical triangle chart patterns formed by the support and resistance trend
lines. The only way in which they differ from symmetrical triangle is they last
for longer periods from three to six months. The trend lines of the wedge
generally slant in either upward or downward direction, which makes them differ
from the uniform trend lines of the triangles.
TYPES
OF WEDGES
Based on the slant pattern of the trend lines, wedges are
classified as
1-FALLING WEDGE - sloping downward
2-RISING WEDGE - sloping downward
FALLING
WEDGE
The falling wedge is generally a bullish pattern which
signals the upward price break through wedge and to move uptrend. The trend lines
in this pattern get slanted and converge in downward direction as the price is
moving downtrend. Here the price movement bounces between the trend lines,
which bound the price movements.
The common thing to look in a falling wedge is that the
upper or resistance trend line should exhibit a sharper slope than the lower or
support trend line. The flat nature of support trend line shows that the
selling pressure has dropped down making it tougher for the sellers to push the
price downwards.
The price movement of a wedge should at least test both
the support and resistance trend lines twice during the lifetime of a wedge.
The more it tests at the resistance level the quality of the wedge is
considered to be high.
The buy signal is indicated if the price breaks through
upper resistance trend line. This breakout should be at higher volume but due
to the long term nature it should be confirmed that the price has successive
closes above resistance line.
RISING
WEDGE
The rising wedge is a
bearish pattern that signals a downward movement in security price. The trend
lines of a rising wedge slant and converge in an upward direction. The price
movement fluctuates between two trend lines. Once the price moves towards the
apex, the momentum weakens. The traders would view for a move below the lower
support line for a reversal in uptrend. The sellers start to gain momentum as
the buyers’ strength weakens because of the inability of the buyers to take
price higher. The pattern gets completed once the sellers take control of the
stock when the price falls below support line
Source : https://www.globalmarketastro.com/blog/wedges-rising-and-falling/
Source : https://www.globalmarketastro.com/blog/wedges-rising-and-falling/
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