You can experiment with it, but most of all, you must observe the rule of SL < TP. Sometimes it’s hard work setting Stop Loss according to this strategy, since the pattern occurs at the end of the trend. Stop order (Stop Loss, SL) is set outside the pattern’s border. Set a trading target (Take Profit, TP) at the level of one of the internal tops of the descending “Wedge” – they might be points (3, 4) *“Sweet zone” is the conditional name of the favorable range for the market entry that refers to the zone from the previous extreme to the pattern’s border (it is marked in green on the chart on the right side).Įnter the market (1) when the price is in the “sweet zone” (2) Strategy of market entry in the “sweet zone” *: “Wedge” is the pattern of average complexity within which the price makes abrupt moves followed by false breakouts due to constant making of new highs at that, the steeper the slope of the pattern, the harder it is to trade with the pattern successfully.Īlternative strategy of market entry and exit points. Alternative Strategies for the “Wedge” Pattern By the way, a snapshot of the order book (2) indicates that it is the last time when the price has made a new high. This may indicate adding to positions by a major player and preparation for the price reversal. In our case, the price constantly makes a new high on one side and comes back abruptly inside the pattern’s range – thus, the impulse in this direction is not of interest to us. Let’s clarify: as a rule, when the impulse is expected to make a new high, the price waits out while Stop Loss/Take Profit orders cluster on both sides of the pattern’s range. However, if conditions for clustering of orders are specially created for the “ Triangle”, these orders (1) are constantly triggered in case of the “Wedge”. The “Wedge” is often similar to a “Triangle” pattern having a horizontal flat side. The purpose of these manipulations is simple – knocking extra “passengers” out of the market or adding to positions by a large participant. Reasons for the “Wedge” Pattern Formationīeing a reversal pattern, the “Wedge” pattern implies manipulations during its completion.
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