IRIS Looks Good with Falling Wedge
IRIS Looks Good On Support area with Falling Wedge Keep eye on it
HOW TO IDENTIFY A FALLING WEDGE PATTERN
The falling wedge pattern is interpreted as both a bullish continuation and bullish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain different market conditions which must be taken into consideration.
The differentiating factor that separates the continuation and reversal pattern is the direction of the trend when the falling wedge appears. A falling wedge is a continuation pattern if it appears in an uptrend and is a reversal pattern when it appears in a downtrend.
Continuation or (Reversal) Pattern:
Key points to remember:
HOW TO IDENTIFY A FALLING WEDGE PATTERN
The falling wedge pattern is interpreted as both a bullish continuation and bullish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain different market conditions which must be taken into consideration.
The differentiating factor that separates the continuation and reversal pattern is the direction of the trend when the falling wedge appears. A falling wedge is a continuation pattern if it appears in an uptrend and is a reversal pattern when it appears in a downtrend.
Continuation or (Reversal) Pattern:
- Identify an uptrend or (downtrend)
- Link lower highs and lower lows using a trend line. The two lines will slope downwards and converge
- Look for divergence between price and an oscillator like the RSI or stochastic indicator
- Oversold signal can be confirmed by other technical tools like oscillators
- Look for break above resistance for a long entry
Key points to remember:
- Identification of the trend is crucial
- Both continuation and reversal scenarios are inherently bullish
- Both patterns present favourable risk to reward ratios as they generally precede big moves
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.