August 1, Publications , Ramblings 1. Track any Forex pair and any currency in Edgewonk.
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This leads to a wedge-like formation, which is exactly where the chart pattern gets its name from! With prices consolidating, we know that a big splash is coming, so we can expect a breakout to either the top or bottom. On the other hand, if it forms during a downtrend, it could signal a continuation of the down move.
In this first example, a rising wedge formed at the end of an uptrend. Notice how price action is forming new highs, but at a much slower pace than when price makes higher lows. See how price broke down to the downside?
That means there are more forex traders desperate to be short than be long! They pushed the price down to break the trend line, indicating that a downtrend may be in the cards. Just like in the other forex trading chart patterns we discussed earlier, the price movement after the breakout is approximately the same magnitude as the height of the formation. Only this time it acts as a bearish continuation signal. As you can see, the price came from a downtrend before consolidating and sketching higher highs and even higher lows.
In this case, the price broke to the down side and the downtrend continued. What did we learn so far these Japanese candlestick chart patterns? Just like the rising wedge, the falling wedge can either be a reversal or continuation signal.
As a reversal signal, it is formed at a bottom of a downtrend, indicating that an uptrend would come next. As a continuation signal, it is formed during an uptrend, implying that the upward price action would resume. Your data is stored locally in your Edgewonk folder and you can take it with you, wherever you go. You only pay once and all future updates are free of charge.
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