The profit target is measured by taking the height of the back of the wedge and by extending that distance down from the trend line breakout. Take profit point-3 (this is the same height as the back of the wedge number-2) Number 3: Distance between entry (sell order-1) and Where the stop loss should be placed, is placed above the top side of the rising wedge. Number 1: Area where price has broken the lower support trend line The area where price breaks the lower support trend line and where we should place the sell order. Show exercise Trading The Rising Wedge: Technique 1Įnter the market by placing a sell order (short entry) on the break of the bottom side of the wedge.Īvoid false breakouts by waiting for the candle to close below the bottom trend line and enter. In the following exercise, you can practice how to identify a rising wedge in an uptrend:Įxercise 1: Identify the rising wedge in an uptrend. This suggests potential selling opportunities. The chart below illustrates a rising wedge pattern in a downtrend.Įxercise 1: Identify the rising wedge in a downtrend. Identifying The Rising Wedge Pattern In A Downtrend. The slowing of momentum is noted, and it usually precedes a reversal to the downside. This occurs when the price makes higher highs and higher lows.Ī contracting range identifies this in prices.Ī pattern is created as the price is confined within two lines that get closer together. In an uptrend, a rising wedge is considered a reversal pattern. Identifying the rising wedge pattern in an uptrend The rising wedge chart suggests possible selling opportunities. This is a bearish pattern that signals that security is likely to move downward. The rising wedge chart pattern can be seen with higher highs and higher lows. This type of wedge pattern is bearish and signals that the price is likely to drop and move in the downward direction soon. The price remains confined within the trend lines of the rising wedge pattern. The wedge pattern is usually a long-term pattern.Ī rising wedge chart pattern occurs in the uptrend or when the prices rise.

Wedges are similar in construction to a symmetrical triangle. This pattern signals a reverse of the trend that is currently formed within the wedge. The wedge pattern can occur both when the price, on the whole, is increasing or decreasing. Basically, in a wedge chart pattern, the highs are rising at a different rate than the lows falling. If we see a pattern in which the two trend lines are converging and not parallel, this forms the wedge pattern.

When we connect the Pivot Highs or the high points in a price chart with a straight line and separately connect the Pivot Lows or the low points in a price chart with a straight line, we form two trend lines. What are the techniques to trade a Rising wedge? What is a Wedge Chart Pattern? How do we identify a rising wedge pattern?Ĥ. In this lesson, we shall discuss the following:ģ.

Rising wedge vs bull flag