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Descending wedge probability9/24/2023 The image below represents our entry, exit, and stop-loss in the AUD/NZD Forex pair. When the price action breaks the upper trend line, it shows that the sellers are now out from the game, and this instrument is ready for brand new higher highs and higher lows. The loss of selling momentum indicates that the buyers are gaining control. We can clearly see that the price action is confined within the two lines, which gets closer together to create a Falling Wedge pattern. As we can see in the image below, we have identified a Falling Wedge pattern in the AUD/NZD Forex pair. This means that we can soon expect a buy-side reversal in the trend. Wedge Pattern Trading Strategy The Falling Wedge PatternĪs discussed, a Falling Wedge indicates that the sellers are losing momentum in the market, and the buyers are gaining momentum. As the price action drops, the loss of volume and momentum increases the probability of bullish reversal. Mostly this pattern takes almost three to four lower lows and lower highs to print on the price chart. Most often, the Falling Wedge pattern forms at the end of the downtrend, as it prints the last lower low on the chart. To confirm this pattern, see if the direction of the trend is downward. The Falling Wedge is a bullish pattern that begins wide at the top and contracts at the bottom. The loss of volume on each successive high indicates that the price is losing its momentum, and soon we can expect the downside reversal. Upper and lower trend lines must have at least 3 to 4 higher highs and higher lows to consider that as a Rising Wedge pattern. This pattern typically appears in an uptrend, and on higher timeframes, it takes nearly 3 to 6 months of time to form. The pattern contracts as the prices rise. The Rising Wedge is a bearish trading pattern that begins with a wide bottom. The Falling wedge (signals a bullish reversal).The Rising Wedge (signals a bearish reversal).
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