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Monday, 01 December 2008 11:25 |
A descending wedge is usually bullish. When it begins with a wide top and narrows as prices action moves lower, it usually results in a top side break. Prices form a wedge that slopes downward as the high and low prices begin to contract and lower volatility ensues. Although this pattern is considered to be bullish, it is important to remember that a break out is needed before confirmation of the bullish bias occurs.
Because the falling wedge can occur as a reversal pattern or a continuation pattern, it is also important consider the direction of the prevailing trend. If the prevailing trend id down, you will be looking for reversal setups. If the prevailing trend is up, you will be looking for continuation setups.
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ForeXecutor 
