The Crypto Trader by Unknown

Author:Unknown
Language: eng
Format: epub
Published: 2019-05-13T15:46:50+00:00

Figure 11

Chart by TradingView

As they’re symmetrical, they don’t give much of a clue as to their future direction, but it’s still worth watching for a breakout (in either direction) as the price approaches the apex of the triangle, because the eventual price movement can be quite strong, as is the case in figure 11.

Wedges

Wedges are basically upward or downward-sloping triangles, also known as pennants. Figure 12 shows the Dash cryptocurrency forming a wedge in late 2017, just before a big surge upwards. Descending wedges tend to break out upwards, and ascending wedges tend to break out downwards. Usually they are continuation patterns, which means they are a short counter-trend reaction during the main trend. So you might get a strong trend upwards, followed by a short downward wedge like the one in figure 12, then the resumption of the main upward trend. A breakout from a wedge can provide a good opportunity to get into an already long-established trend.

But as I said, they are not particularly reliable patterns. You will often find that what you think is a wedge or sloping triangle morphs into a different pattern altogether. Also, they often break out in the ‘wrong’ direction. So while you’re watching a wedge develop, just keep an open mind about what could happen next.

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