Falling Wedge is one of the most common and recognisable chart pattern. However, many (and may be even most of) people trade it in a wrong way, which often results in taking losses. Knowing when to enter the market can make the difference between catching a clean breakout and getting trapped in a fake move. The chart above compares two similar wedge setups that look alike at first glance, but are built on completely different conditions.
On the left, we see a textbook example of a healthy bullish breakout through the falling wedge:
In contrast, the right side shows a very similar pattern — a falling wedge forming after a downtrend, but with crucial differences.
To sum up, a REAL FALLING WEDGE has its core volumes near the bottom - sign of a healthy accumulation phase, while a FAKE WEDGE has its core volumes near the top - sign of a manipulation made to trigger stop losses & liquidations.
On the left, we see a textbook example of a healthy bullish breakout through the falling wedge:
- After a downtrend, the price begins to form a horizontal accumulation range, marking a bottom with it.
- When the first round of accumulation is done, there is a bounce following, marking the first touch of the future resistance.
- The second round of accumulation usually forms lower than the first one, allowing bulls to properly accumulate the asset at a favourable price.
- When accumulation is done, bulls are processing a breakout of the wedge. What is important there is that the most of volumes are being absorbed on this move which allows the impulse to grow further.
In contrast, the right side shows a very similar pattern — a falling wedge forming after a downtrend, but with crucial differences.
- The price touches the potential support, but bounces way too fast, not allowing traders to properly accumulate the asset.
- After the pump, the accumulation phase starts forming near the future resistance. The core volumes are forming at the top of the pattern as well.
- Big accumulations near the top of the patterns trigger the price to dump in order to hunt stop losses & liquidations which ruins the accumulation.
- After the wedge breakout, people who accumulated at the top must sell their assets in BE or even at loss, because the accumulation phases were above the resistance breakout point.
- As the result, fresh buyers face the high sell pressure on the breakout, which makes the impulse weak and fade in the end.
To sum up, a REAL FALLING WEDGE has its core volumes near the bottom - sign of a healthy accumulation phase, while a FAKE WEDGE has its core volumes near the top - sign of a manipulation made to trigger stop losses & liquidations.
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Klondike Official Links:
Website:
klondikepro.com/
Public Telegram Channel:
t.me/CryptoKlondike
Twitter:
twitter.com/Robert_Klondike
Trade on Bybit with us:
partner.bybit.com/b/6694
Website:
klondikepro.com/
Public Telegram Channel:
t.me/CryptoKlondike
Twitter:
twitter.com/Robert_Klondike
Trade on Bybit with us:
partner.bybit.com/b/6694
Publikasi terkait
Pernyataan Penyangkalan
Informasi dan publikasi ini tidak dimaksudkan, dan bukan merupakan, saran atau rekomendasi keuangan, investasi, trading, atau jenis lainnya yang diberikan atau didukung oleh TradingView. Baca selengkapnya di Ketentuan Penggunaan.