It’s worth noting that the Ascending Broadening Wedge pattern can also result in a false breakout. Ultimately, the best approach will depend on the trader’s risk tolerance, trading style, and market conditions. However, it may also result in missing out on some of the initial gains from the breakout. This approach can provide a better risk-to-reward ratio, as the entry price is closer to the breakout level and the stop loss can be placed tighter. The profit target can be set based on the height of the pattern, with the expectation that the price will move at least the same distance as the pattern’s height in the direction of the breakout.Īlternatively, traders may wait for a pullback to the breakout level before entering a position. A stop loss is placed on the opposite side of the wedge. Traders may enter a short position depending on the direction of the breakout. The breakout should ideally occur on higher than average trading volume, as this confirms that there is significant selling pressure behind the move. To trade the Ascending Broadening Wedge pattern, traders typically wait for the price to break through the lower trendline with a strong volume surge. Any price and availability information displayed on at the time of purchase will apply to the purchase of this product.) How To Trade The Ascending Broadening Wedge Pattern? It’s characterized by two diverging trendlines that connect a series of higher highs and higher lows.Īs price approaches the top of the wedge, it becomes increasingly difficult for buyers to push the price higher, resulting in a reversal.Įventually, the price breaks out of the wedge to the downside, signaling a potential trend reversal.Ĥ.5 out of 5 stars ( 216) Available for Amazon Prime 33% Off $120.00 $76.95 (as of 12:54 GMT -05:00 – More info Product prices and availability are accurate as of the date/time indicated and are subject to change. The Ascending Broadening Wedge pattern is a neutral to bearish chart pattern that can provide traders with valuable insights into the market’s psychology. What Is The Psychology Behind The Chart Pattern? Price must also fill out the pattern with at least three touches of each trend line. Price action follows two upward sloping trend lines which diverge to form a broadening structure. How To Identify The Ascending Broadening Wedge Pattern? Unlike other patterns where trend lines converge, upward sloping support and resistance lines diverge instead, creating a broadening structure that ultimately breaks down. Direction: Reversal What Is The Ascending Broadening Wedge Chart Pattern?Īn Ascending Broadening Wedge is a bearish chart pattern that commonly takes place at the end of a bullish trend as a reversal pattern.
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