Knowledge Center Technical Analysis
Wedge Patterns
Right Angled Ascending Broadening Wedge Pattern
Right-Angled Broadening Wedges pattern comes in two categories, ascending and descending. They comprise a horizontal trend line and a sloping trend line. Prices should hit both trend lines twice. Two hits form the horizontal trend line, and two hits form the sloping trend line. A partial rise or a partial decline is formed on a breakout from these two patterns.
Right-Angled Ascending Broadening Wedge Pattern: Strategy 1:
Once the support level has been broken, we need to enter and the price moves towards the downside target. In The Natural Gas Daily chart below, wait for a candle to close below the horizontal support level before looking to go fresh short entry.
Technical Chart:
The “stop-loss” is placed above the sloping Resistance trend line of the Right-angled ascending broadening wedge pattern. The “profit target” can be analyzed by calculating the height of the Back of the Right angle, Ascending broadening wedge, and extending that distance down from the breakout.
The chart shows the following:
No:1 Area where price has broken the lower horizontal support trend line
1- Sell order (short entry)
2- Stop loss
Where Should the Stop Loss be Placed?
The stop loss should be placed above the top side of the Right-angled Ascending broadening wedge.
No:3 Back of the wedge (Target aimed)
No:4 (this is the same height as the Back of the wedge number-3)
The Profit target
The profit target is calculated by measuring the height of the Back of the wedge and by expanding that distance down from the trend line breakout.
Trading the Right-Angled Ascending Broadening Wedge:
Strategy 2:
In the natural gas Daily chart, wait for the price to trade below the trend line (broken support), as in the first illustration.
Place a sell order on the retest of the trend line (broken support now becomes resistance).
Technical Chart :
No: 1 Point at which the price finds resistance at the lower part of the wedge.
1- Short entry
The chart above illustrates that the stop loss would go above the new resistance area.
No: 2 Back of the wedge
No: 3 The distance between entry (sell order) es1 and take profit tp3 is the same height as the Back of wedge no 2.
1- Sell order (short entry)
2- Stop loss
3- Take profit
Profit Target
Alike strategy 1, the profit target is calculated by taking the height of the Back of the wedge and by expanding that distance down from the entry.
Conclusion:
A summary of the discussion “Right angled ascending broadening wedge pattern” indicates a likely selling opportunity after an uptrend or an existing downtrend.
The entry (sell order) is positioned when the price breaks below the bottom of the horizontal support line of the wedge or when the price finds resistance at the lower trend line.
The stop loss is positioned above the Back of the wedge.
The take profit target is calculated by taking the height of the Back of the wedge and by expanding that distance down from the entry.
What is a Partial Rise?
It can be termed a partial rise after the two trend lines have been formed. The pattern can be identified when the price rises off the lower trend line and doesn’t reach the upper trend line before falling back to the lower trend line.
What is a Partial Decline?
It can be termed a partial decline when the price falls off the upper trend line and doesn’t reach the lower trend line before rising back to the upper trend line.
