Wedge

What is it ?

Rising wedge and falling wedge are patterns, that are relatively easy to be seen on a graph, they have incredible profitability while used correctly, however, on the other hand they do not occur as much as double top or double bottom. Rising and falling wedge are absolutely same but with only difference that one leads to the upside and one to the downside.

These two (actually just one) patterns basically do not require any technical skills and do not have much rules because everyone trades them differently.

How does the wedge look like ?

Easy right ? You can definitely see what the falling wedge is from the picture and I have not even explained it yet. So we are looking for a strong up move and than a triangular pattern leading back to the start of the up move. The easiest is to put two lines connecting tops and bottoms so you can clearly see the triangle.

How to trade it ?

If you see this pattern upfront, find a zone where the wedge is likely to shoot from. Usually it is the price where the up move started, but it can be also a strong support/resistance or even a precise number like 100$ in some cases.

Than all you need to do is to watch the graph regularly and wait for a confirmation, that the price is going to jump from the spot you have already predicted. You can look for a pin-bar like in the previous picture or a bullish engulfing pattern, rise in stochastic RSI, divergence… That is clearly up to you and it is always different so you need to evaluate the situation in the real time.

So now you see that it is not only about the pattern itself, but about a combination of more factors, indicators or even timing. There is no pattern in the world that works 100% of the time with 100% precision but with other factors and experience you gain over time, you can develop a nice, profitable strategy.