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Ascending Broadening Wedge Pattern

Because of the similarity the Ascending broadening wedge holds with a broadening price pattern, it is known as Ascending broadening wedge.

Symmetrical broadening formations have a price pattern that circles about a horizontal price axis. The ascending broadening wedge varies from a Ascending broadening wedge when the axis rises.

The upper trend line of an Ascending broadening wedge moves upward at a higher rate than the lower one. This gives shape to an evident broadening form. The ascending broadening wedge formations volume is expected to increase ever so slightly as the breakout moves forward.

Trading the Ascending broadening wedge: strategy 1

Points to be focused:

Price movement is controlled and alternates connecting the two non-parallel trend-lines. This is indicated in the chart below.

The upwardly slanted megaphone shape.

Both upper and lower trend-lines resolve slope higher.

The upper trend-line will have a higher slope than the lower one, revealing the appearance of a broadening formation.

Each trend-line ought to have a minimum of three hits or close to that.

Volume in general rises as prices move up and falls as prices move down.

Volume is likely to rise over time in most cases.

It is necessary to enter the market by placing a sell order (short entry) on the break of the Support line side of the wedge.

It is also necessary to avoid false breakouts by waiting for the candle to close below the bottom trend line and then enter.

The area to be noted where the price breaks the lower support trend line and where we should place the sell order.


ascendingbroading

No 1: Area where price has broken the lower support trend line

1 -Sell order (short entry)

The stop loss is placed above the top side of the Ascending broadening wedge.

No 2: Back of the wedge

No 3: Distance between entry (sell order-1) and

take profit point-3 (the same height as the back of the wedge number-2)

2 -Stop loss

3 -Take profit

The Profit target

The profit target is calculated by taking the height of the back of the wedge and by extending that distance down from the trend line breakout.

Trading the Ascending broadening wedge: Strategy 2

We need to wait for the price to trade below the trend line (broken support), similar to the first illustration.

It is necessary to place a sell order on the retest of the trend line (broken support now becomes resistance).


ascendingbroading

No 1: The point at which the price finds resistance at the lower part of the wedge.

1- Short entry

The chart below portrays that the stop loss would move above the new resistance area.

No 2: Back of the wedge

No 3: Distance between the entry (sell order) es1 and take profit tp3, same height as back of wedge number 2.

1 -Sell order (short entry)

2 -Stop loss

3 -Take profit

Profit Target

Alike strategy 1, the profit target is calculated by taking into account the height of the back of the wedge and by lengthening that distance down from the entry.

Summary

An outline of the topic discussed:

The ascending broadening wedge pattern indicates a potential selling opportunity either after an uptrend or throughout an existing downtrend.

The entry (sell order) is placed if the price breaks below the bottom side of the wedge or if the price finds resistance at the lower trend line.

The stop loss is placed above the back of the wedge.

The take profit targets are calculated by taking into account the height of the back of the wedge and by enlarging that distance down from the entry.

The patterns are reliable once a downside break happens; on the other hand they are less reliable former to the break of the lower trend-line.

The two sloping trend lines are the most noticeable; the upper one will have a somewhat steeper slope than the lower one and the trend lines will then spread out over time while both slope upward. When prices break through the lower trend-line they will be likely to drop quickly.

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