Retests do happen, but they are less frequent than what we see in the ascending, descending and symmetrical triangles. The example above shows that there is no immediate retest of the breakout lower. When I am trading the rising wedge, I generally take the initial breakout that moves below the second to last test of the bottom trendline. It doesn’t matter where it shows up in any trend – it is an extremely bearish pattern. An easy way to think of the rising wedge is that it is an overwhelmingly bearish pattern. When you see the rising wedge appear after a prolonged downtrend, be careful! The rising wedge that forms after a long bear move is often a continuation pattern. But you will also find the rising wedge appear at the bottom of a trend. You might think that a rising wedge pattern shows up at the top of a trend, and it often does. This is true in the stock market as well as in the forex market. If you read Bulkowski’s work, you’ll know that he recommends at the trendlines in a wedge should be touched at least five times in order for the wedge pattern to authentic. These are incredibly profitable and favorable patterns when you spot them – and they are horrible to trade against if you are trading inside of them. Because wedges have two trendlines that point in the same direction, the slope of the move is often extreme and is indicative of a climax move. Wedge patterns should tell you one thing: the end is coming. Depending on the technical analysis material you read, you will see wedges that may look like channels, and that is fine – many do. Falling wedges have a trendline both above and below, but sloping down. Rising wedges have a trendline both above and below price sloping up. Symmetrical triangles have a downtrend line and an uptrend line. Descending triangles have flat bottoms with declining tops. Ascending triangles have flat tops and a rising bottom. The difference between wedge patterns and triangle patterns is simple: the trendlines in a wedge pattern point in the same direction. Wedges are made of two trend lines that are drawn just like a triangle. Wedges look like (and in fact, are) extended triangles. It has been my experience that wedge patterns are one of the most profitable setups in the forex market. I don’t have any real statistics to reference other than my years of trading experience. So, bullish patterns perform much better than bearish patterns in the stock market. Most of the literature is written for the stock market, which is an overwhelmingly long-biased market. I want to stress, again, that the frequency and positive expectancy of patterns in technical analysis will vary from market to market.
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