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Wedge

RISING WEDGE PATTERN ( REVERSAL OR CONTINUATION )Reversal or Continuation Pattern Rising Wedge Prices are moving upward, forming higher highs and higher lows, but the price is confined within two lines which get closer together to create a pattern. This indicates a slowing of momentum and it usually precedes a reversal to the downside. This means that you can look for potential selling opportunities. IDENTIFICATION GUIDELINES 1. The Shape of The Rising wedge – Two price trendlines both sloping upwards, the upper one following higher highs and the lower one following higher lows. Both trendlines must slope upwards and eventually intersect. 2. Formation of The Rising Wedge – Prices should rise to hit the upper trendline at least three highs(1-3-5), then fall away. Prices should fall to the lower trendline at least twice(2-4), then rise again before a final breakout. When you see less than 3 swing highs and 2 swing lows between the upsloping trendlines, be cautious about it. 3. Duration of The Rising wedge- The Rising Wedge has a minimum duration of 3 weeks and it rarely exceeds 3 or 4 months long. Anything less than 3 weeks of duration likely to be a pennant formation, not a rising wedge. 4. Volume inside The Rising Wedge – Volumes tends to be decreasing through the formation. 5. Pre-mature or False Breakout – Because volume is usually low in The Rising Wedge formation, it takes very little activity to bring about an erratic and false movement in price, talking the price outside of trendlines. 6. Breakout – Price closing below the lower rising trendline confirms the breakout. HOW TO TRADE A RISING WEDGE Trading Rules. 1. Entry – Sell short the stock day after Prices closing below the lower rising trendline. If you miss it, wait for the pullback then short when price resumes the breakout direction after the throwback completes. When you missed and, If you Don’t Get A pullback to the lower rising trendline then Don’t Chase The Stock Price for selling short. 2. Price Target – The technical target is the price which was a starting point of the lower rising trendline. 3. Taking Profit – For short-term traders, cover short when the price reaches near to the price which was a starting point for the lowe rising trendline. For intermediate and long-term traders, hold the stock as per your risk & capital management applied before entering into a trade. 4. Stoploss – usually, price closing above swing high or top is a stop-loss. But very often, The gap between swing high and breakout price is very high. So it won’t be suitable for a good risk-reward ratio. Without a Good Risk to Reward ratio in trading or investing can never create a wealth. Always Pay close attention to Risk-Reward Ratio. We must have RR above 1: 2.
NSE:NIFTYEducation
by Equity-Earningz
FALLING WEDGE PATTERN ( REVERSAL OR CONTINUATION)Reversal or Continuation Pattern Falling Wedge Prices are moving downwards, forming lower highs and lower lows, but the price is confined within two lines which get closer together to create a pattern. This indicates a slowing of momentum and it usually precedes a reversal to the upside. This means that you can look for potential buying opportunities. IDENTIFICATION GUIDELINES 1. The Shape of The Falling wedge – Two price trendlines both sloping downwards, the upper one following lower highs and the lower one following lower lows. Both trendlines must slope downwards and eventually intersect. 2. Formation of The Falling Wedge – Prices should hit the upper trendline at least twice(2-4), then fall away. Prices should fall to the lower trendline at least three lows(1-3-5), then rise up and be giving a final breakout. When you see less than 3 swing lows and 2 swing highs between the downsloping trendlines, be cautious about it. 3. Duration of The Falling wedge- The Falling Wedge has a minimum duration of 3 weeks and it rarely exceeds 3 or 4 months long. Anything less than 3 weeks of duration likely to be a pennant formation, not a falling wedge. 4. Volume inside The Falling Wedge – Volumes tends to be decreasing through the formation. 5. Pre-mature or False Breakout – Because volume is usually low in The Falling Wedge formation, it takes very little activity to bring about an erratic and false movement in price, talking the price outside of trendlines. 6. Breakout – Price closing above the upper downward sloping trendline confirms the breakout. HOW TO TRADE A FALLING WDEGE Trading Rules. 1. Entry – Buy the stock day after Prices closing above the downward sloping upper trendline. If you miss it, wait for the pullback then buy when price resumes the breakout direction after the throwback completes. When you missed and, If you Don’t Get A pullback to the lower rising trendline then Don’t Chase The Stock Price for buying. 2. Price Target – The technical target is the price which was a starting point of the downward sloping upper trendline. 3. Taking Profit – For short-term traders, sell when the price reaches near to the price which was a starting point of the downward sloping upper trendline. For intermediate and long-term traders, hold the stock as per your risk & capital management applied before entering into a trade. 4. Stoploss – usually, price closing below the pattern swing low is a stop-loss. But very often, The gap between the pattern swing low and breakout price is very high. So it won’t be suitable for a good risk-reward ratio. Without a Good Risk to Reward ratio in trading or investing can never create a wealth. What is the point if you are losing big and earning small? Learn to trade patterns like a pro to get maximum profit out of it.
NSE:NIFTYEducation
by Equity-Earningz
1
NIFTY's View Nifty has formed Broadening Formations : Right-Angled and Descending . After touching the lower line 3rd time it was moving up gave an impression to touch the other side of pattern but again it has reversed and continued in the prevailing down direction. Statistically this partial rise mostly predicts the direction of the breakout which is down in this case, however demand may emerge in price zone of 10145 - 10095. If that fails to provide support we may witness free fall till 9700 as there is no significant support in this zone.
NSE:NIFTYEducation
by praveen.bhatiya