A Rising Wedge Price Pattern-Bank Nifty

VanijyamShala Updated   
A rising wedge in an uptrend is considered a reversal pattern that occurs when price is making higher highs and higher lows. Price witnessed an uptrend with higher lows and higher highs from the swing low of 17105 to 21807. The two touch points at 21807 and 22480 form an upper resistance line. The two touch points at 19507 and 21768 form a lower support line. The upper resistance line and the lower support line is converging with the maturity of the pattern. The advances from the lower support line is becoming shorter and shorter, which makes the present rally unconvincing. The decreased momentum in price creates an upper resistance zone that fails to keep pace with the slope of the lower support line which indicates a supply overhang as prices increase.

The key level of the ongoing trend is at 21768 and the critical level at 20926. The bearish confirmation of the pattern does not come until we see a VTB of support line. A valid break of the support line should be accompanied with a faster move in terms of price and time. The time elapsed for the pattern formation is about 44 (4hour) bars. A possible price reversal in the ongoing trend can occur between the 46th and 49th bar.

Trade Plan:
One can initiate a short position with the formation of a reversal price bar pattern at the upper resistance line.

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Trade active:
Price formed an Outside bar pattern. The high of the bar is at 23079 and low at 22501. A SHORT POSITION is active below the low of outside bar at 22501. Stop- Loss for the existing position is at 23079.


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