A wedge trading pattern is formed when two trend lines start converging. The lines are drawn to highlight the connection between the high or low of a stock over a period. Technical analysts use them to analyses reversal / continuation in price action. It is a valuable indicator for traders to understand how the markets move over an extended period.
The wedge pattern consists of converging trend lines through 10 to 50 trading periods. These periods can be in the intraday format or daily format. The pattern is considered as a rising or falling wedge depending on the direction. The pattern is known to predict trend reversal / continuation accurately.
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