SP500 Short Position
Updated
Wedges: three pushes up or down
The traditional definition of a wedge is a converging triangle that slopes up or down, and traders expect the breakout to be in the opposite direction of the slope. They look for an upside breakout of a wedge that is sloped down, and for a downside breakout of a wedge that is sloped up.
Wedges are continuation patterns when they are pullbacks within trends, and they are reversal patterns when they are large and the context is right. When they are flags, they are small reversal patterns. For example, when there is a wedge pullback in a bull trend, the wedge is a small bear leg. Traders expect that bear leg to fail and to reverse up.
In the broadest sense, a wedge is any pattern with three (sometimes four or five) pushes that is sloped up or down. It does not have to be convergent and the third push does not have to exceed the second.
As soon as there are two pushes, traders can draw a line connecting them and then they can extend the line to the right (a trend channel line). They will then watch for a reversal if the market approaches the line for a third time.
The closer any pattern is to ideal, the more reliable it is because more computers will treat it as significant. However, traders should never lose sight of the underlying forces and should learn to become comfortable with every conceivable variation of every pattern. This will give them far more trading opportunities.
brookstradingcourse.com/price-action/10-best-price-action-trading-patterns/
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The traditional definition of a wedge is a converging triangle that slopes up or down, and traders expect the breakout to be in the opposite direction of the slope. They look for an upside breakout of a wedge that is sloped down, and for a downside breakout of a wedge that is sloped up.
Wedges are continuation patterns when they are pullbacks within trends, and they are reversal patterns when they are large and the context is right. When they are flags, they are small reversal patterns. For example, when there is a wedge pullback in a bull trend, the wedge is a small bear leg. Traders expect that bear leg to fail and to reverse up.
In the broadest sense, a wedge is any pattern with three (sometimes four or five) pushes that is sloped up or down. It does not have to be convergent and the third push does not have to exceed the second.
As soon as there are two pushes, traders can draw a line connecting them and then they can extend the line to the right (a trend channel line). They will then watch for a reversal if the market approaches the line for a third time.
The closer any pattern is to ideal, the more reliable it is because more computers will treat it as significant. However, traders should never lose sight of the underlying forces and should learn to become comfortable with every conceivable variation of every pattern. This will give them far more trading opportunities.
brookstradingcourse.com/price-action/10-best-price-action-trading-patterns/
-- Join the Scalping XBT Charts Public Telegram --
-- Únete al Telegram Público de Scalping XBT Charts --
t.me/scalpxbtchannel
Contacts in: @gustavcaves
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