![]() ![]() If, after you are projecting the time on the right side, the fifty level is not retraced and the time element is expiring, the pattern you are looking at is most likely not a wedge. In order to do that, just measure the time taken for the whole wedge to form and project that time on the right of the chart, from the moment the wedge ends.Īfter the lower trend line (2-4 trend line) in a rising wedge is broken, look for price to retrace to the fifty percent level from the whole wedge, in less than the time taken for the whole wedge to form in the first place. Trading wedges without taking into account the time element is one of the biggest mistakes traders make, and we want to avoid that by all means. However, what to do next? Is there a measured move for wedges? Like mentioned earlier, wedges are travelling between the 1-3 and 2-4 trend lines, so waiting for the lower trend line (in the case of a rising wedge) or the upper trend line (in the case of a falling wedge) to be broken is mandatory. The first wave being the longest and the fifth the shortest, it implies the third is not the shortest one of the three waves that are rising, so this is a valid ending diagonal in the form of a rising wedge. There is a clear five waves structure and the legs of the wedge are coming in corrective patterns (zigzag for the first wave, contracting triangle for the second, zigzag for the third, flat for the fourth, and yet another zigzag for the fifth). The chart above shows a rising wedge on the eurjpy pair and it marks the beginning of the wedge on the lower left and the end of the wedge at the fifth wave highs. This is an important competitive advantage such a pattern offers because if price extends beyond that level, the implications are that the third wave is not the shortest one anymore, hence the structure you are looking at is not a wedge. The same theory states that the third wave in an ending diagonal that comes in the form of a wedge should not be the shortest one, and this allows a trader to have an educated guess about the possible end of the wedge, in the sense that, by measuring the length of the third wave and applying the outcome on top of the fourth wave, the result should give us the maximum value for the upcoming fifth wave. Wedges have the tendency to travel between the 1-3 and 2-4 trend lines if we are to take into consideration Elliott Waves Theory and, when they are forming an ending diagonal, each and every wave out of those five waves that form a wedge should be corrective, meaning they should come in a corrective shape: zigzag, flat, triangle, etc. ![]() So, while the statement that a rising wedge is falling and a falling wedge is rising still holds true, the question is: are wedges reversal patterns, and if yes, what are the things to look for in a wedge to consider it a reversal pattern? Well, this is certainly true most of the times, however, there are some cases when a rising wedge, being part of an intervening x wave in a double three running combination for example, is only briefly corrected, only for price to move strongly in the direction of the initial wedge. There is a saying that a rising wedge is falling and a falling wedge is rising. Wedges are one of the most common patterns to be found when trading and they are of two types: rising and falling wedges. Trading Rising and Falling Wedges Written by John Home > strategies > Forex Trading Strategies ![]()
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