Welcome to the first part of trading price action patterns.
Price Action is considered gold in the trading world. Price Action refers to the specific type of patterns formed by the candles. The price makes various highs, lows, higher highs, and lower lows to form these patterns.
In this part, we are going to learn about these three types of patterns – Broadening Tops and Bottoms, Triangles, and wedges.
BROADENING tOP's and BOTTOM's
Broadening Tops and Bottoms are general patterns where the price makes continuous lower lows and lower highs. The pattern with broader lows is known as Broadening Bottom whereas the one with broader tops is known as Broadening tops.
Broadening Top
Necessary conditions to look for in Broadening Bottom pattern
TREND
The Broadening top should form at the end of the short uptrend. (it is a consolidation)
FEATURES OF THE PATTERN
- Broadening Shape with Higher Highs and Lower Lows.
- Topline slopes up and the Bottom-line slopes down.
- At least Two Minor highs and two minor lows.
BREAKOUT IDENTIFICATION
Generally a rise in Volume.
A breakout occurs when the price closes above the formation’s high
(upward breakout) or below the pattern’s low (downward breakout).
Broadening Bottom
hOW TO IDENTIFY A BROADENING BOTTOM PATTERN.
tREND
The Broadening top should form at the end of the short downtrend.
FEATURES OF THE PATTERN
- Broadening Shape with Higher Highs and Lower Lows.
- Topline slopes up and the Bottom-line slopes down.
- At least Two Minor highs and two minor lows.
BREAKOUT IDENTIFICATION
Generally a rise in Volume.
A breakout occurs when the price closes above the formation’s high
(upward breakout) or below the pattern’s low (downward breakout).
Ascending wedge
TREND
Bearish Move expected.
A rising wedge generally is a trend reversal indication.
I look for a downtrend in an Ascending wedge.
An up move is also a possibility.
fEATURES oF THE PATTERN
- Two Upsloping trend lines.
- At least 3 touches on both sides.
- The upper line has a steeper slope than the lower line.
BREAKOUT IDENTIFICATION.
Two breakout types.
- When the trendline breaks. (wait for a retest if you want to go safe.)
- A safer approach would be to wait for the price to cross the lowest or highest point of the pattern.
Descending wedge
how to identify a descending Wedge
TREND
Bullish Move expected.
A Descending wedge generally is a trend reversal indication.
I look for an uptrend in a descending wedge.
An down move is also a
FEATURES OF THE PATTERN
- Two Downsloping trend lines.
- At least 3 touches on both sides.
- The lower line has a steeper slope than the upper line.
BREAKOUT IDENTIFICATION.
Two breakout types.
- When the trendline breaks. (wait for a retest if you want to go safe.)
- A safer approach would be to wait for the price to cross the lowest or highest point of the pat
a FEW MORE BROADENING FORMATION
BROADENING FORMATION - RIGHT ANGLED ASCENDING
BROADENING FORMATION - RIGHT ANGLE DESCENDING
