Forex Falling Wedge Pattern

The Forex falling wedge pattern can be applied to trading forex or trading futures or stocks.

Yesterday I sent a swing trade alert to members on a pair we are trading, the stop and target can be seen in the members section of our website. Typically the falling wedge pattern can either be a reversal or continuation pattern, however I have noticed this pattern worked best as a reversal pattern.

 

I made a quick video below to explain some of my thoughts on this pattern today

 

 

As a reversal signal, it is formed at a bottom of a downtrend, prior to the move higher we typically noticed some changes that one can look for.

As a continuation signal, this pattern can be seen in an uptrend, in theory, the upward price action would resume. This pattern is bullish, where the falling wedge pattern is bearish.

Below, the falling wedge pattern theory is used on the AUDNZD and shows a  reversal signal. After a downtrend, the price made lower highs and lower lows.

Some traders will look at volume if they use this pattern to trade stocks or futures, this will not work with Forex, since there is not central exchange and volume is not a good indicator.

 

 

Upon breaking above the top of the wedge, this Forex pair made a move upwards. In theory many traders will go by the formula that the move should be equal to the height of the formation. In this case, the formation is only starting to take place. I will be placing more examples of this formation on Monday to see how this formation plays out in the next few trading days.

Have a pleasant weekend!