We are seeing a wedge evolve here, and when price comes to the end of the wedge it tends to break up or down.
I was recently tricked by one of these patterns. I was trading a wedge assuming the direction of the breakout was a continuation of the long term trend.... but contrare, it was a reversal fakeout!
And I have learn't my lesson.
This time I am looking for decisive break of the wedge, coupled with a strong increase in volume. This will confirm the direction and get me into a low risk trade.
The beauty of the wedge is in its simplicity. It tells you the direction of the move and where to place your stops. When a wedge break is coupled with an increase in volume and volatility you know you have a good entry.
Once you are in your can trail the price with your stop loss order. A good guide for the SL distance is the difference between the top and bottom of the wedge at the point the breakout occurs.
I was recently tricked by one of these patterns. I was trading a wedge assuming the direction of the breakout was a continuation of the long term trend.... but contrare, it was a reversal fakeout!
And I have learn't my lesson.
This time I am looking for decisive break of the wedge, coupled with a strong increase in volume. This will confirm the direction and get me into a low risk trade.
The beauty of the wedge is in its simplicity. It tells you the direction of the move and where to place your stops. When a wedge break is coupled with an increase in volume and volatility you know you have a good entry.
Once you are in your can trail the price with your stop loss order. A good guide for the SL distance is the difference between the top and bottom of the wedge at the point the breakout occurs.