A falling wedge is a bullish chart pattern indicating a potential reversal from a downtrend to an uptrend.
Characteristics: Shape**: Two downward-sloping, converging trend lines. Volume**: Decreases during pattern formation. Breakout**: Confirmed when price breaks above the upper trend line, ideally with increased volume.
Types: Reversal Falling Wedge**: Occurs after a downtrend, signaling a potential reversal to an uptrend. Continuation Falling Wedge**: Occurs during an uptrend, indicating temporary consolidation before resuming the uptrend.
Trading Strategy: Identify the Pattern**: Look for converging trend lines with lower highs and lower lows. Wait for the Breakout**: Enter a trade when the price breaks above the upper trend line. Stop-Loss Placement**: Below the lowest point of the wedge. Target Price**: Measure the height of the wedge and add it to the breakout point. Key Points: Bullish Pattern**: Suggests a potential upward price movement. Confirmation**: Breakout above the upper trend line, preferably with increased volume.
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