The line that connects the bottoms of the formation represents a support. You can also split it into two take profit levels. A Rising Wedge pattern is a triangle formation with noticeable slant to the upside. Take profit level is mirrored by measuring the height of the first swing wave in a rising or falling wedge pattern. Keep in mind, breakout candlestick must have at least 70% body (means small wick and big body). A rising wedge forms in uptrends and is a signal of a bearish reversal, while a falling wedge forms during downtrends and signals that a rebound in prices is. And then you will decide yourself which one option will be good. Here you will use your common sense and calculate risk reward ratio for each case. Rising wedge patterns form by connecting at least two to three higher highs and two to three higher lows which become trend lines. It is a bullish candlestick pattern that turns bearish when price breaks down out of wedge. There are two options here, either to trigger a trade just after breakout of the trend line or to wait for retracement to the Fibonacci 50 level. The rising wedge pattern is characterized by a chart pattern which forms when the market makes higher highs and higher lows with a contracting range. A rising wedge pattern consists of a bunch of candlesticks that form a big angular wedge that is moving up in price. Stop loss can also be placed above the key level which will be a more safe option but as we also have to look for a good risk reward that’s why first one is good. Make sure to add spread while adjusting the stop loss level. Stop loss will be above the last high made by the price before breakout of trend line in case of rising wedge chart pattern. Now let’s talk about the stop loss, take profit and entry of trade setup. A rising wedge is a bearish stock pattern that begins wide at the bottom and contracts as trading range narrows and the prices move higher.
If Price break the trend line without touching resistance or supply level, then it can be a false breakout to trap retail traders. Like if there is forming a rising wedge pattern and there is also a strong resistance or supply level above then if Price break trend line after touching the resistance and supply level then it is a good pattern. The wedge is fairly common pattern, and if you familiar with Elliott Wave analysis a wedge often appears in wave 5-the final stage-of a trend.
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