Trading Ascending Broadening WedgesĪscending Broadening Wedges tend to breakout in the direction of the previous price trend and so act as continuations of this move. Tall and wide patterns work better than short and narrow patterns. The upper trendline should rise more steeply than the lower trendline thus forming the broadening wedge. Three touches to each trendline.īoth the upper and lower trendlines should rise. With the Ascending Broadening Wedge formation we are looking for three peaks and three valleys with tops and bottoms forming the trendlines. The higher lows make a lower rising trend line, this forms the lower boundary to our pattern. The higher highs make a rising trend line, this forms the upper boundary to our pattern. We are looking for higher highs and higher lows in a tight range. We then track price as it rises away from the low. The broadening aspect of them suggests increasing price volatility and increasing volume this spells out opportunity. The Ascending Broadening Wedge is one of six Broadening Wedge patterns to be found in price charts.īroadening Wedges are plentiful in price charts and can provide good risk and reward trades. Descending Right-Angled Broadening Formations.Ascending Right-Angled Broadening Formations.There are 6 Broadening Wedge patterns that we can separately identify on our charts and each provide a good risk and reward potential trade setup when carefully selected and used alongside other components to a successful trading strategy. Its opposite is an ascending broadening wedge.Broadening Wedges are one of a series of Chart Patterns in Trading: In 40% of cases, the price makes a pullback in support on the descending broadening wedge’s resistance line.įor your information: A descending broadening wedge is a reversal chart pattern. In 81% of cases, the pattern's price objective is achieved when the resistance line is broken. In 23% of cases, a descending broadening wedge occurs in a consolidation movement. Statistics of the descending broadening wedge after a bullish movement NB: pullbacks are harmful to the pattern’s performance. The price objective is given by plotting the wedge’s maximum height onto the breaking point Resumption of the bullish movement after correction. CASE 2: formation of a descending broadening wedge after a peak This type of pattern appears during the correction in a bullish movement, it is a bullish continuation pattern. In 21% of cases, the price makes a pullback in support on the descending broadening wedge’s resistance line. In 60% of cases, a descending broadening wedge’s price objective is achieved when the resistance line is broken. In 75% of cases, a descending broadening wedge is a reversal pattern. NB: often, the steeper the descending broadening wedge’s trend lines, the faster the price objective is reached. The price objective is determined by the highest point at which the descending broadening wedge was formed. The break in the resistance line definitively validates the pattern. CASE 1: formation of a descending broadening wedge after a trough This type of pattern appears on the troughs, it is a bullish reversal pattern. A third wave forms afterwards but the sellers lose control again after the formation of new lowest points.ĭuring the formation of a descending broadening wedge, volumes do not behave in any particular way but they increase strongly when the support line breaks. A second wave of decline then occurs of more magnitude, signalling the sellers' loss of control after a new lowest point. The highest point reached during the first correction on the descending broadening wedge’s resistance line forms the resistance. The sellers manage to make the price rebound on the resistance line but lose control after the formation of a new lowest point. The divergence of the two lines in the same direction (increase in price magnitude) informs us that the price continues to fall with movements that are increasingly low in magnitude. This implies that the descending broadening wedge pattern is considered valid if the price touches the support line at least 3 times and the resistance line twice (or the support line at least twice and the resistance line 3 times).Ī descending broadening wedge does not mark the exhaustion of the selling current, but the buyers’ ambition to take control. NB: a line is said to be "valid" if the price line touches the support or resistance at least 3 times. The upper line is the resistance line the lower line is the support line.Įach of these lines must have been touched at least twice to validate the pattern. It is formed by two diverging bullish lines.Ī descending broadening wedge is confirmed/valid if it has good oscillation between the two upward lines. A descending broadening wedge is bullish chart pattern (said to be a reversal pattern).
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