Shape: Wedge

Shape: Wedge

The wedge technical analysis figure occurs in an upward movement and a downward one.

In an ascending one, when the price corridor gradually narrows to the top, forming a figure like a wedge and cannot break through the resistance, but does not go down either, but continues to update local highs.

In a downward movement, everything is the same, only in reverse.

The rising wedge usually breaks down, but it is also possible that the shot will be to the top.

Therefore, here you need to wait for where the price will shoot - up or down, in order to get out of the formed wedge.

You can place pending orders to break through the levels. Of course, the main emphasis should be on breaking through the lower channel.

The wedge figure is not uncommon and works out its movements well, helping to earn.

Here is an example of a rising wedge:

rising wedge

rising wedge pattern

Such a figure as a Wedge is always visible in the market and with experience, you can even learn to predict where the price will shoot based on its behavior, as well as released and upcoming news.

Read also - Pattern: Double Bottom and Double Top

Here is an example of a falling wedge formation:

falling wedge

falling wedge pattern

The wedge is immediately visible, for example, like the well-known figure head and shoulders, but this figure is often worked out unpredictably, as opposed to, for example, the figure double bottom and double top — this figure of technical analysis is a predictable phenomenon.

Why is the wedge unpredictable?

Because if the price narrows in such a narrow corridor, then there is strong pressure from both buyers and sellers.

In case of a breakout, the price may and will rush in an obvious direction, that is: with an ascending wedge - down, but a false breakout may also occur and the price, having pushed off, will break through the resistance and move further.

In general, the wedge figure works, but it is not worth using it as a specific entry point, but you can only confirm the upcoming wedge movement using some strategies.

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