Ascending wedge explaine5/9/2024 Descending TriangleĪ Descending triangle signals the continuation of a downtrend. Normally, the resistance level is formed by two or more similar peaks that allow for drawing a horizontal line. This chart can be built by drawing lines along the resistance and the support levels. It signals the continuation of a bullish trend. The Ascending Triangle is a bullish continuation chart. Also, a wedge is descending or ascending, while a Pennant is horizontal. The Pennant pattern can look like the Wedges pattern, but the Pennant can be wider than a wedge. In the example, a bullish Pennant is shown - the asset price continues its bullish movement. A Pennant can be either bullish or bearish. Then, the price enters in a series of smaller movements. There is a significant increase in the price during the early stages of a trend. Pennant (Flag)Ī Pennant or it is also called a Flag, is formed when the asset price experiences a period of growth, with a consolidation afterward. The Falling Wedge represents a bullish market, and the Rising Wedge represents a bearish market. This chart indicates that the asset price will eventually rise as soon as it breaks the resistance level.īoth Falling and Rising Wedges are reversal patterns. The Rising Wedge signals that the asset price is going to decline as soon as it breaks the support level.Ī Falling Wedge is formed when the price is trapped between the support and resistance levels but this time, the trend is falling, the resistance line is steeper than the support line. A Rising Wedge is formed by the price movement caught between the support and resistance lines, with the support line being steeper than the resistance line. WedgesĪ Wedge can be of two types: falling and rising. After that, the asset continues its bullish movement. The cup looks similar to the Rounding Bottom chart, and the Handle looks like a Wedge pattern that will be explained further.Īfter the Rounding Bottom, the asset price enters into a retracement stage which is known as a handle. It shows a slight bearish sentiment during a bullish trend, but eventually, the trend continues. The Cup and Handle chart is formed during a bullish trend and signals the trend continuation. The Rounding Bottom chart shows the continuation of a trend or its reversal.Īs an example, during a bullish trend, when the asset price drops, the formation of a Rounding Bottom chart may indicate that after the drop, the price will grow again and will continue the bullish trend. This chart signals the market reversal and the start of a bullish trend. The double bottom is formed when the price drops below the support level, then rises to the resistance level and finally drops again. Double BottomĪ double bottom indicates that traders are selling the asset, which causes the asset price to drop. The asset climbs to a peak, then drops again to the support level, then climbs again for a while before reversing back and continuing the bearish trend. Double Topĭouble Top is another pattern that signals a trend reversal. When the third peak falls on the support level again, traders expect a bearish reversal. When the chart is formed, it means that the market may have a bearish reversal.Įven though two side peaks are smaller than a central peak, they all have the same support level. The Head and Shoulders is formed by a large peak with smaller peaks on both sides.
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