The wedge continuation pattern has a distinct slope. The price breakout occurs in the opposite direction of the slope of the wedge and yet, in a similar direction as the one of the original trend.
The wedge continuation pattern gives only a direction signal. No reliable price objective can be extracted from this formation.
There are two types of wedges that are based on the direction of the trend:
- falling wedge pattern
The falling wedge is a bullish pattern. It serves as an indicator that the currency price will break upwards through the wedge and continue its previous uptrend.
- rising wedge pattern
The rising wedge is a bearish pattern. It indicates that the currency price is headed in a downward direction after the completion of the pattern.
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