Euro / Japanese YenEducation
WEDGE PATTERN ( TREND REVERSAL)
Wedges are both trend reversal and continuation patterns. One can define
the different by knowing that a rising wedge in a up trend is a sign of a reversal
whereas a rising wedge in a downtrend is considered as a type of retracementand
you want to be looking to trade back into the direction of the trend (see attachment)
This is also the same for descending wedges. a descending wedge in a downtrend is
the reversal sign and in a up trend is a retracement. The reversal wedge patterns
are signs of a trend losing strength. The pattern pushes into a new highs or lows
but with momentum slowing forming the wedge pattern. once price breaks the
wedge and prior high or low confirming the reversol, I preferably always wait for
a pullback to the breakout of a fib level trading this pattern. Target is the Distance
Between The Mouth of the wedge Added To The Breakout.
Conventional Way To Terad The Wedge Reversal:
-----Ascending Wedge Bearish Reversal-----
(1) Wait for a clear Ascending Wedge to form.
(2) Wait for price to break and close below previous low - swing low.
(3) Sell pullback at breakout level.
(4) Stop above the 50% retracement of top of wedge to breakout. (Can also Use Wedge High)
(5) Target Is the Distance Between The Mouth of the wedge Added To The Breakout.
-----Descending Wedge Bullish Reversal-----
(1) Wait for a clear Descending Wedge to form.
(2) Wait for price to break and close Above previous high.
(3) Buy pullback at Breakout.
(4) Stop below the 50% retracement of breakout to bottom of wedge. (Can also Use Wedge Low)
(5) Target Is the Distance Between The Mouth of the wedge Added To The Breakout.
the different by knowing that a rising wedge in a up trend is a sign of a reversal
whereas a rising wedge in a downtrend is considered as a type of retracementand
you want to be looking to trade back into the direction of the trend (see attachment)
This is also the same for descending wedges. a descending wedge in a downtrend is
the reversal sign and in a up trend is a retracement. The reversal wedge patterns
are signs of a trend losing strength. The pattern pushes into a new highs or lows
but with momentum slowing forming the wedge pattern. once price breaks the
wedge and prior high or low confirming the reversol, I preferably always wait for
a pullback to the breakout of a fib level trading this pattern. Target is the Distance
Between The Mouth of the wedge Added To The Breakout.
Conventional Way To Terad The Wedge Reversal:
-----Ascending Wedge Bearish Reversal-----
(1) Wait for a clear Ascending Wedge to form.
(2) Wait for price to break and close below previous low - swing low.
(3) Sell pullback at breakout level.
(4) Stop above the 50% retracement of top of wedge to breakout. (Can also Use Wedge High)
(5) Target Is the Distance Between The Mouth of the wedge Added To The Breakout.
-----Descending Wedge Bullish Reversal-----
(1) Wait for a clear Descending Wedge to form.
(2) Wait for price to break and close Above previous high.
(3) Buy pullback at Breakout.
(4) Stop below the 50% retracement of breakout to bottom of wedge. (Can also Use Wedge Low)
(5) Target Is the Distance Between The Mouth of the wedge Added To The Breakout.
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