[Trading using Wedge] - Crypto Academy / S5W5 - Homework Post for @sachin08

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1.Explain Wedge Pattern in your own word.

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Ans- A wedge pattern is a market trend commonly found in traded assets, and this pattern is contemplated to be a pattern which establish at the top and bottom of the trend.

Actually guys this pattern follows the upward or downward criteria of the values, which means that it decides that at what time does the value goes upward or downward.

The average time is taken by a wedge to complete itself is 3 to 4 weeks. And guys there is one more quality of wedge is that its upward and downward falling points are always in the same direction falling and rising wedges are a small part of the major trend.

Source

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2. Explain both types of Wedges and How to identify them in detail. (Screenshots required)

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Ans- There are two types of wedge patterns.
(1) Rising wedge.
(2)Falling wedge.

Rising Wedge

It is also known as a bearish version of the wedge pattern. It can be accepted by Its upward narrow shape.

An upward wedge or rising wedge is formed after the combination of the prices between both trendlines. it thinks about an upward price trend bounded by two intersecting, upward sloping trendlines.

(2)Falling wedge

Now we are going to discuss. The falling wedge pattern is identified by a chart pattern of the falling wedge which forms when the market goes lower lows and lower highs similar range. when this pattern goes in a downward trend it considers a reversal pattern as shrinking of the range shows the downtrend is losing steam. when this pattern is found in an uptrend, it is considered a bullish pattern, as the market range becomes tapered intro the correction.

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3. Do the breakout of these Wedge Patterns produce False Signals sometimes? If yes, then Explain how to filter out these false signals.

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Ans- As we all know that above we have discussed the wedges that are of two types one is rising wedge and another is falling wedge. and here in this question, the thing asked is the falling and rising wedges produce false signals.

so the answer can be yes or no because the signal produced by wedges depends on your calculation, which means that what did you use to calculate by the graphs and your drawing is must be the final prediction.

so whatever is predicted by your calculation can be true or false. so we cannot say that wedge patterns can produce false and true signals always.

Ans if the wedge starts falling then there are three ways to know about it are given below-
(1) Two downsloping trendlines.
(2) Multiple touches.
(3) Volume trend.

We can know the false signals by applying Indicator on our chart and with the use of indicator, it will help us in identity of false signals. I am using adx indicator here.

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4. Show full trade setup using this pattern for both types of Wedges. ( Entry Point, Take Profit, Stop Loss, Breakout).

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Ans- Let's explain a trade setup using a wedge pattern as we all know about both wedges rising and falling wedges.

The price targets in both wedges turn out to be a small compound as we knew it. In addition, they are too much laborious to calculate, because here the calculation will take place by your own drawing will impact the target.

Therefore, very the target after the breakout. now we see that a rising wedge is formed which interacts with both trendlines when it breaks the support line, this point is called the entry point of the rising wedge, when this wedge breakout, we can take our entry, and then we can show the mark of taking the level of profit and end loss level just above the peak of the wedge or and some above the resistance line.

Let's explain falling wedge make to touching both trendlines and sometimes it breaks the resistance level, that point becomes our entry point. at the time of breakout, now we can take an entry, and then we can show take profit level and stop loss level.

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Conclusion

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In the above discussion, we have discussed the wedge pattern if someone is able to identify a wedge pattern then it is easy to trade. And we have also discussed the types of wedges that are rising wedge and falling wedge.

Rising wedge has the graph of upward tapering and falling wedge has the graph of downward tapering.

Other things are that on which we have discussed are trade setup and the signals produced by the wedge patterns and etc.