Wedges (saws) is signaling a pause in the current trend.
Wedges could serve as a continuation pattern or a reversal.
Rising Wedge
A rising wedge is formed when price consolidates between support and resistance are tilted upwards.
Here, the slope is steeper than the support line resistance.
With prices consolidate, we know that the big explosion will come, so we can expect the price to be run either up or down.
If the wedge shape rose after an uptrend, usually a reversal pattern.
On the other hand, if formed during the downturn, could signal a continuation of the downward movement.
the important thing is that, when you look at it, you're ready to order your entries!
In the first instance, rising wedge formed at the end of an uptrend. Notice how price action formed new highs.
See how the price drops. That means there are a lot of traders are desperate to buy and then do buy!
They pushed prices down and break the trend line, which suggests that the tendency for downward trend.
Just like in the other chart patterns we discussed earlier, the price movement after the breakout occurs roughly equal to a height of formation.
Now let's look at another example of the rising wedge formation. Only this time acts as a bearish continuation signal.
As you can see, the price derived from the downturn before consolidation with a higher high (higher high) and a higher low (higher low).
In this case, dive down and continuous downtrend. That's why it is called the signal continuation (continuation)!
See how the price goes down the same height as the wedge?
What we learned so far?
A rising wedge forms after an uptrend usually causes reversal (trend) while the rising wedge is usually formed during the downtrend continuation (downtrend).
Simply put, a rising wedge leads to a tendency to decrease, which means that it is a bearish chart pattern!
Falling wedge
Just as a rising wedge, can be a falling wedge reversal or continuation signals.
As a reversal signal, which is formed at the bottom of a downtrend, suggesting that the uptrend is coming next.
As a continuation signal, it is formed during an uptrend, implying that the upward price action will return. In contrast to the rising wedge, falling wedge is a bullish chart pattern.
In this example, serves as a falling wedge reversal signal. After the downturn, the price made a lower high and lower low.
After the break above the trend line, prices move upward approximately equal to the height of formation. In this case, the price rally over the target!
Let's look at an example where the falling wedge serves as a signal of continuation / continuation. As mentioned earlier, when the falling wedge form during an uptrend, usually the signal will return later to continue rising
In this case, price is consolidating some time after a strong rally. This could mean that the buyer only paused for breath, and may recruit more people to join the bull camp.
Hmm, it seems the pair is moving strong. Which way to go?
See how prices broke out to the upside and continue to climb higher?
If we put a buy entry order above the downward trend line connecting the highest pair, we would have been able to jump into the strong uptrend and generating some pips!
Thus some reversal pattern in the pattern saws in forex trading may provide benefits to you
Regards
