![]() Even if a wedge has all its segments as corrective waves, it should be labelled with numbers. As a convention, impulsive waves are labelled with numbers, and corrective waves with letters. Under this theory, the market moving in corrective and impulsive waves, and the theory is based on counting these waves. The most representative part of the Forex Trading Academy project is the one dedicated to the Elliott Waves theory. Trading a wedge is straightforward and leaves little room for different interpretations, as can be seen below. It is said that a rising wedge falls and a falling wedge rises, and this tells much about the price action to be expected after such patterns form. The only difference between a wedge and a triangle is the fact that a triangle usually forms on the horizontal, while a wedge does not. The same is valid after a bearish trend: The market moves higher after the wedge is broken and, in a way, the wedge resembles a triangular formation. ![]() After a bullish trend, the price makes marginal highs, only for the market to aggressively move lower after the wedge is broken. The image above shows a typical wedge, and what such a pattern looks like. ![]() More on this a bit later in this educational article. This is because they take less time to form, and because they can form even if there’s no previous strong trend before the pattern. As a matter of fact, if I were to compare the two reversal patterns, I would value a wedge over a head and shoulders pattern. Wedges form more often than head and shoulders patterns, but this doesn’t mean they are not effective. As a rule of thumb, a rising wedge is a bearish reversal pattern, while a falling wedge is a bullish pattern. On the other hand, a wedge that forms at the end of a bearish trend is called a falling wedge. This is because its head is rising, as the overall price action within the wedge pattern is a bullish one. A wedge that forms at the end of a bullish trend is called a rising wedge. Tips for Trading Rising and Falling WedgesĪ wedge falls into the same category as the head and shoulders pattern: It is a reversal pattern, which means it forms at the end of either a bullish trend or a bearish one. ![]()
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