NB: pullbacks are harmful to the pattern’s performance. The price objective is given by plotting the wedge’s maximum height onto the breaking point Resumption of the bearish movement after correction. CASE 2: formation of an ascending broadening wedge after a trough This type of pattern appears during the correction in a bearish movement, it is a bearish continuation pattern. In 21% of cases, the price makes a pullback in resistance on the ascending broadening wedge’s support line. In 60% of cases, an ascending broadening wedge’s price objective is achieved when the support line is broken. In 75% of cases, an ascending broadening wedge is a reversal pattern. Statistics of the ascending broadening wedge after a peak NB: often, the steeper the ascending broadening wedge’s trend lines, the faster the price objective is reached. The price objective is determined by the lowest point at which the ascending broadening wedge was formed. The break in the support line definitively validates the pattern. CASE 1: formation of an ascending broadening wedge after a bullish movement This type of pattern appears on the peaks, it is a bearish reversal pattern. A third wave is formed afterwards but buyers lose control again after the formation of new highest points.ĭuring the formation of an ascending broadening wedge, volumes do not behave in any particular way but they increase strongly when the support line breaks. A second wave of increase then occurs with more magnitude, signalling the loss of buyers' control after a new highest point. The lowest point reached during the first correction on the ascending broadening wedge’s support line forms the support. The buyers manage to make the price rebound on the support line but lose control after the formation of a new highest point. The divergence of the two lines in the same direction (increase in price magnitude) informs us that the price continues to increase with movements that are increasingly high in magnitude. This implies that the ascending broadening wedge pattern is considered valid if the price touches the support line at least 3 times and the resistance line twice (or the support line at least twice and the resistance line 3 times).Īn ascending broadening wedge does not mark the exhaustion of the buying current, but the sellers’ ambition to take control. NB: a line is said to be "valid" if the price line touches the support or resistance at least 3 times. The upper line is the resistance line the lower line is the support line.Įach of these lines must have been touched at least twice to validate the pattern. It is formed by two diverging bullish lines.Īn ascending broadening wedge is confirmed/valid if it has good oscillation between the two upward lines. However, it is advisable to monitor other technical analysis indicators and market news that could influence price action.An ascending broadening wedge is a bearish chart pattern (said to be a reversal pattern).
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