The subsequent price target is the low of the pattern itself (B) Trading example for the Rising Wedge chart pattern The first price target (D) in a downward breakout is generally taken to be the distance equal to the largest possible difference between the upper and lower trend line within the pattern itself (A > B). Going long based on this upward price breakout is highly speculative because the probability of an at least equally sharp decline is quite significant. When they do occur, these are usually extended moves with high momentum which usually occur at the end of a (strongly) rising trend (recognizable by the sudden considerable distance from, for example, the SMA20). The disadvantage versus the classic breakout is that if the initial move is strong and continues immediately you will be too late to jump on board Rising Wedge Breakout above the upper trendlineīreakouts above the upper trendline are not very common but they do exist. The advantage of this way is that from a risk/reward standpoint it usually yields the best setups. Retest of the initial breakout levelĪs with many other patterns, you can opt not to trade the initial breakout and wait for the price to retest the breakout level. If that happens, further downward movement is expected.

Rising Wedge Breakout below the lower trendlineĭespite the fact that the pattern itself is created by a succession of increasingly higher bottoms and tops, this is a typical bearish reversal pattern and not a continuation pattern as is the case with the triangle formations, for example.Ī rising wedge assumes a breakout below the lower rising trend line (the trendline with the sharpest slope). To increase the reliability of the pattern, there must be at least 5 reversal points within the pattern, ignoring the exact starting point on the lower and upper trendlines.

a lower rising trend line with a sharper slope than the upper one, representing the intermediate bottoms.

an upper uptrend line representing the tops.

The difference in slope between the lower and upper rising trend line creates the typical wedge pattern The lower trend line is steeper than the upper trend line which in itself is a sign that buyers are moving increasingly faster into the market during intermediate price dips. One at the origin and the next one at the 1.272 Fibonacci extension level to maximize profits.A rising wedge is a chart pattern characterized by two rising trend lines running in the same direction but with different slopes. 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. If Price break the trend line without touching resistance or supply level, then it can be a false breakout to trap retail traders.

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.

Rising wedge chart pattern