One at the origin and the next one at the 1.272 Fibonacci extension level to maximize profits. You can also split it into two take profit levels. Take profit level is mirrored by measuring the height of the first swing wave in a rising or falling wedge pattern. Keep in mind, breakout candlestick must have at least 70% body (means small wick and big body). And then you will decide yourself which one option will be good. Here you will use your common sense and calculate risk reward ratio for each case. There are two options here, either to trigger a trade just after breakout of the trend line or to wait for retracement to the Fibonacci 50 level. Stop loss can also be placed above the key level which will be a more safe option but as we also have to look for a good risk reward that’s why first one is good. Make sure to add spread while adjusting the stop loss level. Stop loss will be above the last high made by the price before breakout of trend line in case of rising wedge chart pattern. Now let’s talk about the stop loss, take profit and entry of trade setup. Once the shares break down it is possible that a reversal sell-off measured from the lowest trough to the highest peak could be delivered. If Price break the trend line without touching resistance or supply level, then it can be a false breakout to trap retail traders. The wedge represents a pause to consolidate, with rising highs and lows in a narrowing pattern being the first sign that a bearish wedge is forming. The move was so strong that the bulls never let the correction take on the shape of a normal consolidation pattern that forms pointing down in to the uptrend or a sideways type pattern such as a triangle or rectangle.Like if there is forming a rising wedge pattern and there is also a strong resistance or supply level above then if Price break trend line after touching the resistance and supply level then it is a good pattern. Note the three red bullish rising patterns that made up that impulse leg to the double top at 775 area. Note the inverse H&S bottom that formed at the end of 2011 at roughly 450 or so. PCLN is a perfect example of what I've described above. Let’s look at a few charts that shows a very bullish move up that is made of several bullish rising wedges or flags. They are also like any other consolidation pattern that generally shows up as a halfway pattern. The opposite is true in a downtrend where you can have a series of bearish falling wedges or flags form. When a stock is in a strong move up you can see series of these patterns that from one after another until a top is reached. I have found out through many years of following these bullish or bearish wedges or flags that they tend to show up in fast moving markets. A typical consolidation pattern, like a bullish falling wedge or flag, points down in an uptrend which everybody sees and is accepted as the norm. Instead of pointing down into the uptrend these type of patterns point up into the uptrend. I've been following these two types of patterns for many years and find that are just as reliable as any another consolidation or reversal pattern.Ī bullish rising wedge or flag forms in an uptrend. That means anything is possible regardless of what is taught by the so called experts. Keeping an open mind in the stock markets is the first lesson to learn. These type patterns are missed by 95% of chartists because they supposedly don't exist and if they do exist they can't be trusted. I'm repeatedly told to go back to charting school to learn my lesson. I have gotten more negative e mails from folks that assure me there is no such thing as a bullish rising wedge or flag. In today's Chartology Report I would like to clear up a misconception about rising wedges and flags.
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