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Chapter 14, Part IV. Wedge pattern. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Falling wedge

    A falling wedge forms when the market consolidates between two downward support and resistance lines. The slope of resistance line is steeper, than support one and as we discussed lower highs are formed faster than lower lows. The shape of such kind price action looks like wedge, so that’s why this pattern is called like that.

    Any wedge is a consolidating type of price action, so the market is building energy during the time of wedge holds. Sometime this energy should be released, so we have to expect breakout of the wedge pattern in one or the other direction, according the rules that we’ve pointed.


    Chart #2 | GBP/USD Weekly
    [​IMG]

    Describe me what you see on Chart #2?

    Pipruit: Ok, previous move was up, but wedge is sloped down. Hence, according to our rules, sellers should exhaust during the wedge and buyers will win – the up move should continue. Consequently, this wedge should be a continuation pattern – so that has happened.
    Commander in Pips: Right. Now let’s take a look at reversal falling wedge:




    Chart #3 | NZD/USD Weekly
    [​IMG]
    Pipruit: Yes, I see that our rule holds – direction of the wedge coincides with the previous move and – Tada! It has become a reversal one. Commander and is it always like that?
    Commander in Pips: Well, mostly yes. But there is no such word in the market as “always”. The market is probability substance. If something “always” appears – then everybody has become a millionaire already, because all that they have needed to do is just find out what this “always” is.
     
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Mar 27, 2016
    Hamza Samiullah likes this.
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