Rising wedge pattern is one of the most accurate price action patterns. Being relatively simple to recognize, it is applied in various trading strategies.
⭐️The pattern itself signifies the exhaustion of bulls. Even though the asset keeps growing in value, the price action legs contract forming a narrowing channel. Being stuck between two contracting trend lines, one serving as support and one serving as resistance, the price forms a wedge pattern.
🔔The trigger that we are looking for to sell the market is a bearish breakout of the support of the wedge (candle close below). To not be caught by a false breakout, it is highly recommendable to wait for a bearish violation of the last higher low level as well. Only then the wedge breakout is confirmed.
⚡️Trading the market aggressively, one opens a short position on spot just after the candle closes. ⚡️The conservative trader will wait for a retest of the broken support of the wedge though for a safer entry.
✔️Safest stop will lie strictly above the highest wick within the wedge. ✔️Initial target will be based on the closest key structure support.
Learn to recognize this pattern and be disciplined to wait for its confirmed breakout. Only then a high trading performance will be achieved.
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