![]() ![]() You can use position sizing and stop loss orders to limit your risk per trade to no more than 1-2% of your trading capital. ![]() If you can get a reliable trading algorithm that can effectively identify and trade the wedge pattern, you can automate the strategy. Should I Use Automated Trading for Wedge Patterns? If you want to use indicators, you can use the MACD and volume indicators to confirm the momentum of the breakout. You can trade it without any indicator if you are a pure price action trader. What Indicators Should I Use to Trade Wedges? The exact opposite is true for a falling wedge. In a rising wedge, the breakout of the support line gives a sell signal, while the breakout of the resistance invalidates the pattern. The upper trendline acts as resistance, while the lower trendline acts as support. How to Use Support and Resistance Lines in Wedge TradingĪ wedge is formed between two trendlines that act as resistance and support. There are two types of wedges: the rising wedge and the falling wedge. You set the profit target by projecting the size of the base of the wedge from the breakout level. How to Set Profit Targets for Wedge Trading The daily timeframe and higher are better than intraday timeframes. However, in most technical analysis methods, the higher the timeframe, the more reliable the pattern. Observe if the pattern forms in a sideways market.Observe if the pattern is forming over a short period of time.Be aware of other chart patterns that may be forming simultaneously. ![]()
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