Wedge Pattern

Wedge formations are very similar to pennants except are much stronger indications. In a wedge both the resistance and support lines are sloped. What matters is the direction from which the price enters the pattern.

Once again the resistance/support lines provide the indication of breakout and this is the point to buy or sell as appropriate.

Trading volume decreases during the pattern with a sharp increase as the breakout occurs. This is your indication to sell as the price breaks through the support or resistance line.

The wedge is a reversal pattern indicating the end of a trend. The direction of the breakout should be in the direction of the treadline with the sharpest slope.

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