Wedge patterns are important in trading as they help predict price movements. Here's how they work:
Sell at Top (Rising Wedge): This pattern forms when the price moves upwards in a narrowing range, making higher highs and higher lows. The trend usually breaks downward. The best move here is to sell near the top resistance line before the price drops.
Sell at Fakeout (Rising Wedge): Sometimes, the price breaks upward sharply, but it's a fake breakout. After the fake move, the price crashes. Sell quickly if you spot the fakeout to avoid heavy losses.
Buy at Bottom (Falling Wedge): In this pattern, the price moves down in a narrowing range with lower highs and lower lows. This often signals an upcoming breakout to the upside. The ideal action is to buy near the support line (bottom) before the price surges.
Wait for Retest & Buy (Falling Wedge): After a breakout, the price may come back to test the broken resistance line, which becomes a new support. This retest confirms the breakout. Wait patiently for the retest and buy once the price starts moving up again to maximize gains.
Key takeaway: Rising wedges typically break downward, so sell early. Falling wedges break upward, so buy smartly at the bottom or after a confirmed retest. These patterns are your roadmap to more confident trading decisions!
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