Independent Study The Wedge
| The Wedge |
|
A descending wedge is usually bullish. When it begins with a wide top and narrows as prices action moves lower, it usually results in a top side break. Prices form a wedge that slopes downward as the high and low prices begin to contract and lower volatility ensues. Although this pattern is considered to be bullish, it is important to remember that a break out is needed before confirmation of the bullish bias occurs.
An ascending wedge is usually bearish. What begins with a wide top and narrows as prices action moves higher usually results in a bottom side break. Prices form a wedge that slopes upward as the high and low prices begin to contract and lower volatility ensues. Though this pattern is considered to be bearish, it is important to remember that a break out is needed before confirmation of the bearish bias occurs. Identifying targets is easy with this formation also. All you need to do id identify the widest part of the wedge and look for a target equal to that on the breakout.
|
