Wedge Shape:

(1) Principles of Applying Wedge Shapes

Generally speaking, the application of wedges should follow these principles:

1. Since the wedge is a short-term to mid-term trend formation, it is suitable for short-term trading.

2. The upper and lower trend lines of the wedge must be clearly converging; if the formation is too loose, the likelihood of the shape forming is small, and it is likely to evolve into other consolidation patterns.

3. In the overall wedge shape, the direction of the upper and lower trend lines must be the same and clearly converge to a point.

4. If an ascending wedge occurs in a downtrend, it can be inferred as a rebound wave, rather than the first wave of a bullish trend, but one must pay attention to the subsequent bearish trend.

(2) Disadvantages of Wedge Shapes and Remedies

1. Sometimes the wedge structure is close to the triangle shape, but the trend significance of the two is completely different and must be clearly distinguished.

2. Recognize its characteristics; the price fluctuations of the wedge structure are relatively tight, and the slopes of the two trend lines are clearly upward or downward. Therefore, if one side of the trend line approaches horizontal, such an arrangement should be considered a right triangle shape.