A rising wedge forms on the chart when there is a lot of buying and selling in the security, followed by a significant price increase.
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The first trend line connects the most recent lower and higher highs, while the second connects the most recent lows.
The created shape resembles an upside-down triangle. A rising wedge pattern is a falling wedge pattern.
Because the lower trend line is steeper than the upper one and the low is higher than the high, the rising wedge pattern could be interpreted as a bearish wedge.
Even though the falling wedges have the same shape, the only difference is the angle of the triangle and what the pattern means.
The rising wedge (ascending) pattern is a bearish pattern because it predicts price declines or the start of a downtrend. As the wedge widens, the trade volume decreases.
Even though the wedge still indicates that prices are rising, the fact that trade volume is decreasing may indicate that sellers are tightening their positions in anticipation of a negative breakout.
The bullish slope of the falling wedge (descending) pattern, on the other hand, indicates that a near-pattern rebound is on the way.
A rising wedge is unique in that it can appear as a continuation pattern during a downtrend or as a reversal pattern during an uptrend.
Indicators and Creates
Most of the time, the rising wedge pattern follows long-term trends, making it simple to trade cryptocurrencies.
For example, if a trend has gone too far too fast, the wedge pattern may appear as a sign that it is about to change.
When there are more buyers than sellers, strong trends emerge. Buyers and sellers are doing business at each price.
When there are more buyers than sellers, the price must be raised quickly. This should entice more sellers to enter the market.
If the higher price does not entice more sellers to sell, the price will continue to rise rapidly. This rapid change results in strong uptrends, which attract more buyers who don't want to miss out on the trend (known as FOMO, or fear of missing out).
Once this strong trend has taken hold and the big crypto whales have stopped buying, attracting FOMO buyers, the price will begin to rise again.
Each new high is followed by a new drop, which attracts additional buyers. The market is currently poised for a significant correction due to the formation of a pattern known as a "rising wedge."