Wedge – Rising Wedge and Falling Wedge
Thirty Third session of Forex Training
Welcome back to Forex professional training in financial markets.
Wedge – Rising Wedge and Falling Wedge will be studied in this session.
Wedge
Wedge pattern is a continuation and reversal pattern that has two types: Rising Wedge and Falling Wedge.
Rising Wedge
Rising Wedge can be formed on an agreeing or reverse point on the basis of a trend direction.
If it is formed on a downtrend then it would be a continuation pattern, while on an upward trend it would be reversal pattern.
The distance between the peak and the valley of the first wave would be our TP amount below the breakout point.
The distance between the peak and the valley of the last wave should be our SL amount above the breakout or entry price.
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Falling Wedge
On the basis of a trend direction, Falling Wedge can be agreeing or a reverse pattern.
If it is formed on a downtrend then it would be a reversal pattern, while on an upward trend it would be a continuation pattern.
The distance between the peak and the valley of the first wave would be our TP amount above the breakout point.
The distance between the peak and the valley of the last wave would be our SL amount below the breakout or entry price.
There are several examples on the MT4 platform. A Falling Wedge on an uptrend has a continuation manner.
Trendline can be drawn to clarify the trend zigzag movement. TP amount can be calculated by the first wave, 434 pips.
After price has crossed the breakout point, a Buy order can be placed with 434 pips higher than the entry price.
Trader can draw a Trendline to indicate TP, otherwise, it can be shown by a Fibonacci pattern by relocating it to the breakout point.
SL is under the valley of the last wave, thus TP would be much higher than SL. Another example shows a Rising Wedge on an upward trend.
TP amount can be calculated by drawing a Fibonacci pattern. By relocating the Fibonacci pattern, TP price can be derived easily.
SL is above the peak of the last wave.
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On EURUSD chart with a D1 timeframe, a Falling wedge has formed after 178 days. Trend has an upward direction after the price has crossed the breakout point.
TP on a Buy order would be 462 pips higher than the entry price.
On W1 timeframe of AUDUSD, market price has increased to a certain value followed by an abrupt decline.
AUDUSD normally has an upward trend due to high interest rate, while there would be a sharp decline on an interest rate change.
On USDJPY, a trader can find a continuation Rising Wedge and trend has continued its downward direction. TP amount is the distance of the first wave.
Another Wedge pattern can be identified on an Oil chart. Wedge is one of the most significant patterns a trader should study.
That concludes this session, until next time and another session take care.