The “Wedge” figure is formed when there is a trend. The chart shows distinct movement of the price up or down. The “wedge” is formed as follows: first, there is a sharp jump up or down, then the price growth slows down, and narrowing of the chart is visible. This is a clear signal – changes are happening on the market. When you see the figure, apply the strategy to make your trade successful.
- Find a trend that is coming to an end;
- Build support and resistance lines. Be sure to wait for them to form before you can see the “Wedge”;
- Set up test indicators to make it easier;
- Use a time period: 15S, 30S, or 1M.
The “Wedge” is formed on a downtrend. The support and resistance lines are directed downwards. Carefully watch for a trend change.
When the candlestick closes above the resistance line (in the picture: the upper yellow line), it means there was a breakdown, try to close the trade.
There’s an uptrend on the chart. The support and resistance lines are directed upwards, so the “breakdown” will be downwards. Watch carefully to see if the “Wedge” has formed.
After the candlestick has closed below the support line (in the picture: the lower yellow line) – close the trade down.
Important: A “wedge” can be both an end to a trend as well as an end to a flat (a situation where the price on the chart does not move along a particular trend). Regardless, all its characteristic features will be the same.
Apply the “Wedge” strategy and prove that you are a successful trader!