Falling Wedge ( Reversal or Continuation Pattern ) IDENTIFICATION GUIDELINES 1. The Shape of The Falling wedge – Two price trendlines both sloping downwards, the upper one following lower highs and the lower one following lower lows. Both trendlines must slope downwards and eventually intersect. 2. Formation of The Falling Wedge – Prices should hit the upper trendline at least twice(2-4), then fall away. Prices should fall to the lower trendline at least three lows(1-3-5), then rise up and be giving a final breakout. When you see less than 3 swing lows and 2 swing highs between the downsloping trendlines, be cautious about it. 3. Duration of The Falling wedge- The Falling Wedge has a minimum duration of 3 weeks and it rarely exceeds 3 or 4 months long. Anything less than 3 weeks of duration likely to be a pennant formation, not a falling wedge. 4. Volume inside The Falling Wedge – Volumes tends to be decreasing through the formation. 5. Breakout – Price closing above the upper downward sloping trendline confirms the breakout. HOW TO TRADE A FALLING WDEGE 1. Entry – Buy the stock day after Prices closing above the downward sloping upper trendline. 2. Price Target – The technical target is the price which was a starting point of the downward sloping upper trendline. 3. Taking Profit – For short-term traders, sell when the price reaches near to the price which was a starting point of the downward sloping upper trendline. 4. Stoploss – Usually, price closing below the minor swing low be is a stop-loss. But very often, The gap between minor swing low and breakout price is very high. So it won’t be suitable for a good risk-reward ratio. Without a Good Risk to Reward ratio in trading or investing can never create a wealth. What is the point if you are losing big and earning small? Learn to trade patterns like a pro to get maximum profit out of it. https://equityearningz.com/chartpatterns https://t.me/chartpatterns #stockmarket #stockmarkets #chartpatterns #stockanalysis #fallingwedge #stocktrading #stocktradingcourse #equitymarket #investing #technicalanalysis #stocktradingtips https://www.instagram.com/p/BmoK_UwH8jP/?utm_source=ig_tumblr_share&igshid=1hwlrqseb853n
