BROADENING DESCENDING WEDGE HOW TO

Once we have established the two trendlines with the three price touches on either side we can trade within the patterns themselves, taking swing trades from top to bottom and bottom to top.įor example, price makes the third valley and touches the provisional trendline (made by the first two valleys), confirming the pattern.

There are a few ways to trade these patterns. 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.

BROADENING DESCENDING WEDGE HOW TO

How to trade descending broadening wedge?Ī Trading strategy consists of entry, stop loss, take profit level, and risk management techniques.Broadening Wedges are one of a series of Chart Patterns in Trading: So, it is also an indication of a trend reversal. Now a bullish trend reversal will happen.īut before a bullish trend reversal, market makers will eliminate the retail buyers by giving false breakouts. And the price is already in oversold conditions because of consecutive lower lows. For example, the last wave of the descending broadening wedge pattern will be the greatest compared to previous ones.īecause the market has eliminated the retail traders by big price moves against their direction. But before taking a decision, they will eliminate the retail traders. So, when the price makes lower lows, and every upcoming wave will be greater than the previous wave, it is understood that the price will take a big decision. They will buy when you sell a currency or asset, and they will sell when you buy a currency or an asset. It is understood that institutional traders always capture the stop losses of retail traders. Look at the image below for a better understanding. These are the simple criteria to identify this pattern on the price chart.

There must be at least three waves in the descending wedge pattern.

The starting point of this wedge pattern should be thin, and the ending point should be thick.

Draw two trendlines meeting the swing high and swing low points of waves.

Each upcoming wave should be greater in size than the previous wave.

The price wave should make lower lows and lower highs.

Identify the starting point of the wave.

To find out this pattern on the chart, follow the following steps: In the case of descending broadening wedge, the starting point will be a narrow end, and the ending point will be a thick end because it shows the expansion of the price wave. A wedge is a structure or pattern with one thick end and one thin end. How to identify descending broadening wedge pattern?ĭescending broadening wedge is a type of wedge pattern. In this article, you will learn the descending wedge pattern in complete detail with a trading strategy.

Broadening descending wedge