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Wedge Patterns

The Wedge Patterns in appearance seem very similar to triangle patterns, but the characteristics of the wedge are deeply different. A wedge is drawn uniting a series of maximum and minimum as it's showed:

The lines that delimit a wedge are pointing in the same direction, unlike those of the triangle which present different directions and sometime one of the two could be horizontal. The wedges are divided into two types:

WEDGE FACED DOWN

This formation usually occurs in a bullish trend and it's a temporary interruption. The volume during the formation of the wedge is contracted and then expanded when the price breaks the training. The signal is obtained when the price pierces the formation of the wedge from the bottom up and the volumes increase, in this case we recommend a long term position.

WEDGE FACED UP

The wedge faced up occurs in the bearish trend, that, as his previous antagonist, represent a temporary phase in which the current trend is counter-tendency. Even in this case the volume contracts and expands at the end of the training. The signal is obtained when the price pierces the formation from top to bottom up and the volume increases.

SOME ADVICES

The wedges require statistically from 2 to 8 weeks to complete their training, they are often found in the weekly charts, but rarely in the monthly ones, then, to take advantage of the strategy is necessary to observe the weekly charts and wait for the signal strength. It should be noted that the signal, in order to grant us the closing in favor, must come from the training's breaking, never predict a break, you should just wait for this to happen. In this phase it's advisable to refrain from medium-term investments until it doesn't break the formation.

 

For any further advice do not hesitate to contact us at: info@guidetrading.net

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