What Does A Rising Wedge Mean?

What Exactly Is A Rising Wedge?

The rising wedge chart pattern is a negative chart pattern made up of two convergent trend lines. The pattern's first trend line connects the recent lower and higher highs, while the pattern's second trend line connects the recent lows.

The end result is a shape that resembles a triangle with an upward tilt. A falling wedge pattern occurs in the opposite direction as a rising wedge pattern.

Because the low has surpassed the high and the lower trend line is steeper, the rising wedge pattern may be interpreted as a bearish wedge.

Although the falling wedges have a similar geometry, the only differences are the angle at which the triangle is slanted and the pattern's inference.

The rising wedge (ascending) pattern is a bearish chart pattern because it predicts future dropping prices or a breakout to a downtrend, and trading volume decreases as the wedge progresses.

Even if the wedge continues to capture price activity and advance higher, the decreased trading volume may imply that sellers are building momentum in preparation for a negative breakout.

Rising Wedge: Causes and Symptoms

The rising wedge pattern is commonly observed after long trends. As a result, it can be quite advantageous for cryptocurrency trading.

For example, if a cryptocurrency trend has climbed too swiftly and far, the wedge formation may signal an impending trend reversal.

Significant trends are caused by an imbalance between buyers and sellers. At each price, buyers and sellers are exchanging. If there is an imbalance with many buyers but no sellers, the price must be raised to attract more vendors.

Prices will continue to fluctuate dramatically if the price increase fails to attract other sellers. This quick adjustment generates strong uptrends, which begin to entice more buyers who are afraid of missing out on a strong trend.

After this strong trend has been established and significant crypto whales have lost interest in acquiring, the price will begin to correct, drawing FOMO buyers. Each new high is followed by a downturn that draws in new purchasers.

At this point, the rising wedge pattern has formed, indicating that a severe market downturn is on the way.

What Does A Rising Wedge Mean?

A bearish reversal pattern is the ascending wedge, also known as the rising wedge. As a result, after the pattern is completed, you should expect a market direction reversal.

As the expanding wedge formation continues to rise, a bearish reversal, reversing the upward trend to a downward one, is coming.

A continuation pattern is the inverse of a reversal pattern. The appearance of continuation patterns signifies a break in the broader trend. However, reversal patterns arise after trends expire, and the market reverses course.

The resemblance of a wedge pattern and a triangle pattern may perplex cryptocurrency traders. However, there are variances between the two that allow the trader to more precisely predict the market's future path.