rising wedge example

Rising Wedge

 

This pattern appears on bull and bear market. Rising wedge is a 50/50 pattern – if breakout is downwards it will act as reversal, if breakout is upwards it will act as continuation.. Most of the times breakout is downward. This price formation looks like sharp rising triangle with two trend lines — top and bottom. You can call pattern valid if it has at list 5 touches of top and bottom trend-line. In most cases, narrow patterns perform better than wide ones. Price trend leading to the pattern can be up or down. Target for Take-Profit should be split in to 2 stages as this pattern tends to pullback. The first target, when breakout is downwards, should second touch of bottom trend line. We should place target 2 of TP at the first touch of bottom trend-line. We are avoiding trading patterns which broke out upwards. Reason for that is price usually climbs about 100-150 pips and then drops (1H timeframe).

rising wedge target example

Rising wedge -Example 1

GBPUSD rising wedge

Here we see a rising wedge in action. GBPUSD was climbing for few days and forming a wedge. Higher highs and higher lows are attributes of this formation. To upwards trend-lines creating a triangle with price touching top and bottom line. Once top is reached, price breaking out downwards and drops below second touch of bottom trendline. It is safe to set TP at this level, as further drop is not guaranteed (like everything on financial market). In this case, pattern was a short-term reversal.

Rising wedge – Example 2

 

rising wedge

Here we have a very interesting situation – two rising wedges one after another. First pattern broke out upwards and indeed was signaling trend continuation, but move up was only temporary – 150 pips. Further drop could trigger SL if you would open Long position. Second rising wedge broke out downwards but pullback pushed price higher and formed a double top.  We recommend trading rising wedge with a helper indicator like S-V3 to avoid unwanted surprises.

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