Ascending wedge

Ascending wedge is a bear model that begins with the formation of a broad base and narrows as the upward movement in prices when trading range is compressed. In contrast to the symmetrical triangle, which does not have any particular inclination, neither bovine nor Bear gradient rising wedge is definitely tilted up and have a bearish bias. Although this article focuses on the ascending wedge as turning on the model, it can also be included in the category of continuation patterns. As a model to continue, rising wedge will still tilt up, but the slope will be against the prevailing downward trend. As a model of turning, ascending wedge tilted upward in the direction of the prevailing trend. Regardless of the nature (or the continuation of a turn), rising wedge is considered as a model for bear.

1. Prior Trend: To qualify as a model of formation of turn, must be prior to the trend to turn. Usually, the bottom gusset is formed over a period of 3-6 months (for long-term scale), and can observe the medium-and long-term trend turns. Sometimes, the current trend is fully in ascending wedge, in other cases, the model is formed after a prolonged increase.
2. The top line of resistance: it is required at least two maximum reaction to form the upper resistance line, although ideally it would be three. Each reaction maximum should be higher than previous peaks.
3. The bottom line of support: requires at least two minimum reaction to form the bottom line of support. Each reaction must be at least higher than the previous minimum.
4. Convergence: The upper resistance line and lower support line converge as the model. Promotions from the reaction minimum (bottom line of support) are becoming shorter and shorter, making the rally unconvincing. This creates a top line of resistance, which can not maintain the same slope as the bottom line of support and show that the proposed increases to the extent of price increases.
5. Breakthrough Resistance: bearish character models are not confirmed until the line of support will not be convincingly broken. Sometimes prudent to await the break below the previous minimum of reaction. Once the support broken, sometimes it can be reactionary rally to test the newly created level of resistance.
6. Volume: ideally, if the amount will decline as the rising prices and a wedge. Increased support in the break lines can be bear proof.

Ascending wedge can be one of the most difficult graphic models to accurately recognize and related trade. At the same time as formation of consolidation, the loss of a rising momentum, with each enhancing the model gives its bearish bias. However, a series of higher highs and higher minimum support directly bullish trend. The final breakthrough of support indicates that the sellers finally won the battle and are likely to push down prices. In this model there is no technology for the design of a subsequent decline, so you need to use other aspects of technical analysis for purposes of measuring price.

Schedule "ANN" represents an excellent example of turning a rising wedge model, which was formed as a result of weakening of the momentum and cash flow.

• The previous trend is: starting from a minimum at around 10 in October 1998. ANN increased to 23 in less than 7 months. Last ascending branch is formed with a sharp increase from a level below 15 in February to 23.5 in mid-April.
• The top line of resistance: The upper resistance line was formed by three consecutive higher maximums.
• The bottom line of support: the bottom line of support was formed by three consecutive higher minimums.
• convergence: The upper resistance line and lower support line converge as the model. Visual assessment confirms that the slope of the bottom support line steeper than the upper line of resistance. The lower slope of the upper line of resistance indicates that the momentum fading, as the price makes new records.
• Breaking through the resistance: the price crept through the support of more than a week before the final break with a sharp decline. The previous reaction was overcome at least a few days later, a long black candle (red arrow).
• Volume: Chaikin money flow back into the negative zone in late April and was well below -10%, when the support line was broken. It has also been increased when he was breaking the previous reaction minimum.
• Support from the April level in the reaction area 20 has turned into resistance, and the price tested that level in early July, before declining further.

Forex Magazine
based on www.stockcharts.com