Hello Crypto Friends!
Lets look at wedges. There are four types.
- Descending Wedge/Falling Wedge -
Bitcoin on the daily. A descending wedge is a bullish pattern as the probability of it breaking upwards is high.
This was a tough wedge to draw, but if you use the volume you can see that it decrease as the pattern forms, and when it breaks out, it should do so with high volume. As you can see the volume spiked with that big green candle, the wedge was then back-tested as support.
These can be traded much like Triangles, conservatively on the actual breakout or back-test. Or aggressively buying the touch of the bottom trend line.
This particular wedge did not give a 3rd touch using wicks on the bottom line, If you used candle bodies it would have worked out nicely. Using divergence on RSI here would have helped.
The targets for Descending Wedges is either the middle section or the top of the wedge.
We have already hit the target on this one!
- Ascending Wedge/Rising Wedge-
So BTC broke the Descending Wedge, and is now in an Ascending Wedge.
This is basically the inverse of the Falling Wedge and can be traded in reverse.
Lets analyse this one quickly and see where we think it will break -
So the Falling Wedge, came to the 20 mark on the RSI before putting in divergence.
Currently we have not hit the 80 mark on the uptrend....
There is divergence on the RSI, but this could be hidden bullish divergence as marked with the bottom trend line on the RSI.
This means price has gone up, but the RSI has come down. This is not confirmed yet, but should do in the following days.
Another cool trick is that you can draw these patterns on the RSI. Look what pattern is forming!! A Falling wedge!!
- Broadening Wedges - Ascending and Descending -
Ascending Broadening Wedge on ADA/BTC. These patterns are very bullish when inside of the range, and bearish when they break.
The inverse is true for Descending Broadening Wedges.
Trading and targets are the same as the other wedges.
Lets see what happens with BTC in the next 2 weeks. Do you think the wedge will break up or down??
Happy Trading!!
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