How to Draw The Wedge Formation Pattern

The wedge formation is a technical analysis pattern that is similar in shape and time frame to the symmetrical triangle. Both patterns are identified by two converging trendlines that come together at an apex. The wedge pattern typically lasts for a period of more than one month but not more than three months, and is considered an intermediate-term pattern.

One key feature that distinguishes the wedge from the symmetrical triangle is the noticeable slant of the trendlines. The wedge pattern has a distinct slant, either upward or downward, that sets it apart from the symmetrical triangle. This slant is also known as the "direction of bias" and is indicative of the direction of the potential breakout. Typically, a falling wedge is considered bullish and a rising wedge is bearish.

For example, in a bullish wedge formation, the trendlines will converge downward, and in a downtrend, the trendlines will converge upward, as shown in Figure 6.8a and Figure 6.8b respectively. It is important to note that the wedge pattern, like the flag pattern, slants against the prevailing trend.

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