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The falling wedge pattern is one of the most powerful trend continuation patterns in my trend trading toolbox. I love this pattern so much because it allows me to spot extremely precise entries, stop losses & take profits.
They have the same look as a wooden doorstop that you would put under your door to keep it open.
I prefer to have this pattern with a downtrend however, I will still trade it at the end of the uptrend as long as it breaks down to the downside & re-test the trend-line.
With all chart patterns, they work better inside of the trend, so a falling wedge ideally you would want to see on a bullish retracement inside of a bearish trend for the best validity of the setup.
Many investors will try to find the very last point that is touched inside of the falling wedge to try and get the very start of the downtrend move, for me I prefer to see a break-down to the downside out of support and then a pullback to the bottom trend-line which is now retested as resistance as my ideal sell entry.
It’s not a hard pattern to find, you just need to find what looks to be like a wooden doorstop that you would see inside of your elementary school, whenever your teacher would keep the door open. It’s usually angled the exact same as that.
I have listed a picture of what they should look like below whether it’s at the end of a bullish trend or at the end of a bullish retracement.
It doesn’t have to be this same amount of points, it just needs to resemble the same shape.
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