![]() It is created when the price action forms a series of lower highs and lower lows. Once prices move out of the specific boundary lines of a falling wedge, they are more likely to move sideways and saucer-out before they resume the basic trend. There comes the breaking point, and trading activity after the breakout differs. Volume keeps on diminishing and trading activity slows down due to narrowing prices. Therefore, it is always good to have a few trading strategies up your sleeve for trading these chart patterns. Identifying Wedges, both Rising and Falling, on the price chart of a security is not a very complex affair. There are several different volume indicators that can be used for this purpose. For that reason, in the following sections, we will jump into the market psychology behind the formation of Wedges, and discuss all details that you need to know on the subject. Now that we have already covered the interpretation of the Rising Wedge Pattern, understanding the formation of the Falling Wedge Pattern should be relatively easy. The knowledge and experience he has acquired constitute his own approach to analyzing assets, which he is happy to share with the listeners of RoboForex webinars.FCX provides a textbook example of a falling wedge at the end of a long downtrend.This implies that the rising wedge pattern is considered valid if the price touches the support line at least 3 times and the resistance line twice.On the other hand, the second option gives you an entry at a better price.These readings can be leveraged to confirm that the pattern that you are looking at is in fact a Wedge Pattern.In this case, the trade gets invalidated and a loss could occur if the price reverts to negate the profit made from short selling the security soon after the breakout occurs.You can leverage these structural components to identify and to confirm Wedges on the price chart of a security. The Rising and the Falling Wedges are both characterized by several structural components. The lower trendline in the pattern is composed of connected, consecutive price lows depicted over the given period. In essence, during this phase, the market generally reverts to how it was before the pattern’s formation. Therefore, it will show you both the direction and the magnitude of the volume change, which are both crucial in identifying the Wedge Patterns. This is because this indicator measures the changes in volume relative to the direction of the price change. ![]() How to Recognize and Interpret Rising Wedge Patterns.What is a Falling Wedge Reversal Pattern?.Trading Strategy for the Falling Wedge Pattern.
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