How to trade descending broadening wedge?Ī Trading strategy consists of entry, stop loss, take profit level, and risk management techniques. So, it is also an indication of a trend reversal. Now a bullish trend reversal will happen.īut before a bullish trend reversal, market makers will eliminate the retail buyers by giving false breakouts. And the price is already in oversold conditions because of consecutive lower lows.
For example, the last wave of the descending broadening wedge pattern will be the greatest compared to previous ones.īecause the market has eliminated the retail traders by big price moves against their direction. But before taking a decision, they will eliminate the retail traders. So, when the price makes lower lows, and every upcoming wave will be greater than the previous wave, it is understood that the price will take a big decision. For more information see pages 81 to 97 of the book Encyclopedia of Chart Patterns, Second Edition and read the following. Most often, youll find them in a bull market with a downward breakout. They will buy when you sell a currency or asset, and they will sell when you buy a currency or an asset. The ascending broadening wedge is a chart pattern that tends to disappear in a bear market. Higher pivot highs and higher pivot lows are technical signals of an uptrend. Trendlines are a visual representation of support and resistance in any. Ascending Channel: An ascending channel is the price action contained between upward sloping parallel lines. It is understood that institutional traders always capture the stop losses of retail traders. Trendline: A trendline is a line drawn over pivot highs or under pivot lows to show the prevailing direction of price. Look at the image below for a better understanding. These are the simple criteria to identify this pattern on the price chart. There must be at least three waves in the descending wedge pattern.The starting point of this wedge pattern should be thin, and the ending point should be thick.Draw two trendlines meeting the swing high and swing low points of waves.Each upcoming wave should be greater in size than the previous wave.The price wave should make lower lows and lower highs. Identify the starting point of the wave.To find out this pattern on the chart, follow the following steps: In the case of descending broadening wedge, the starting point will be a narrow end, and the ending point will be a thick end because it shows the expansion of the price wave. A wedge is a structure or pattern with one thick end and one thin end. Advertisements How to identify descending broadening wedge pattern?ĭescending broadening wedge is a type of wedge pattern. In this article, you will learn the descending wedge pattern in complete detail with a trading strategy.
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