It is impossible to trade forex without understanding different patterns on charts. These patterns are indications of the trend. Traders can anticipate the future price movement by studying these patterns.
Some important patterns are head and shoulders, Wedge, double top and bottom, triangles, flags, and cup & handle. These patterns not only help traders to predict what price will do next, but they also guide traders about the history of price. In this post, we’ll discuss rising wedge vs ascending wedge.
The major difference between both patterns is level lines. In a rising wedge, the resistance line is not horizontal, while in an ascending triangle it is horizontal. The support line of the ascending triangle is slightly inclined, while in the wedge it is steeper than the resistance line.
Both patterns do the same functions; they have the same exit and entry points. They confuse traders a lot. With just a few differences they appear similar in shape. Let’s discuss both patterns in detail.
What Is Rising Wedge Pattern
A rising wedge is a pattern that signifies uptrend reversal, formed mostly in the bearish market. This pattern is typically formed when the price moves upward and downwards converging to a single point known as the apex.
To make this trend, two trend lines are drawn, one is passing through two pivot highs and the other is passing through two pivot lows. The imaginary angle seems to be narrowing along with these trend lines. The end or corner of the angle is always pointed upwards. This shows an inclination towards an upward trend.
What Is Ascending Triangle Pattern
The ascending triangle is a commonly used pattern in technical analysis. It is formed by drawing a horizontal line along the swing high prices and trend line along swing low prices. It signifies the continuation of the pattern without paying too much focus on the previous pattern or price.
It is mainly formed on the uptrend. Traders mostly look for breakout points for ascending triangles. The price may go up or down after the breakout. When this pattern appears after a downtrend, it signifies the price reversal. So it is important to consider the pattern as relative continuation or reversal rather than rise and fall.
Rising Wedge Vs Ascending Triangle
Although both do the same function they are different from each other in certain aspects. Let’s check out the major and minor differences between both patterns:
The major difference between both patterns is the marked difference in shape. The shape of the wedge is different from the triangle. In wedge trend lines are pointed upwards, while in triangle trend lines are inclined towards convergence.
Level Line Difference
Another major difference between the two patterns is the level line difference. In a rising wedge, the resistance level is not a horizontal line. While in an ascending triangle the resistance level is a horizontal line. The support level is also different in both, inclined towards convergence in a wedge, moving towards the trend line in the ascending triangle.
A rising wedge indicates a reversal pattern while ascending wedge signifies a continuation pattern. The rising wedge pattern can occur at the mid of the downtrend as well. The ascending triangle pattern occurs mostly at the price breakout levels.
Although both patterns have the same highs and lows. But the volume is different in both points for both patterns. For rising wedge volume is higher for downswings. However, this volume is higher in downswings for ascending triangles. For deeper understanding keep this difference in mind.
The ascending triangles have flat tops with high prices or lows. On the other hand, the rising wedge does not show a flat top. The reason is that the angle of inclination is different in both patterns. It narrows down in wedge.
The slop in the rising wedge is pointed upwards. On the other hand, the slope in ascending triangles is drawn in a straight line. This slope is a horizontal line that is approaching the convergence line.
When trading for a rising wedge, consider the bottom line as a resistance line or signal line. It is important to look for breakouts and pullbacks. In ascending triangle breakout may result in an uptrend. The best thing to trade in an ascending triangle is to wait for a breakout.
Pros & Cons of Rising Wedge
It is knowledgeable to know the pros and cons of the rising wedge before using it as an indicator.
Let’s read out some of its pros and cons below:
- This indicator can be applied to multiple types of markets such as forex and commodity
- Pro traders can easily identify this pattern and they know entry, exit, and stop-loss points very well
- If traded correctly, it can provide optimum profit on every trade.
- It can confuse the novice trader easily.
- It is not accurate with the particular type of trend
- It requires the support of other indicators and oscillators for confirmation.
Pros & Cons of Ascending Wedge
It is important to know the pros and cons of the ascending triangle before using it as an indicator. Let’s read out some of its pros and cons below:
- Identifying this pattern is very easy. It is a clear pattern.
- It provides an excellent opportunity for traders to get profit from short-term trades.
- The life of the pattern is medium, not so long.
- It can go in a downtrend, no confirmation
- Breakout in this trend can be false
Frequently Asked Questions
Is a Rising wedge bullish?
The pattern of rising wedge signals a bullish reversal. It is bearish itself. It indicates that the bullish trend is about to end here. It can occur anywhere even in between the downtrend. It will break out bearish.
What does a rising wedge indicate?
A rising wedge indicates that the next price move will be bearish. You can benefit from it by short position. It also indicates the reversal of pattern when bears dominate in the market. Price will either move upward or downward depending on trendline breakout.
Is an ascending triangle bullish?
Yes, ascending triangles are bullish. It indicates that the market is about to grow higher. It has a series of higher lows approaching. Pro traders make entries as the price breaks out along the resistance level.
To conclude both patterns do the same function yet they are different. Trendlines, slope, angle of inclination, all are different. The rising wedge is an indication of a trend reversal while ascending triangle is an indication of the continuation of the trend.
Read the pros and cons of trading in both patterns before opening a position. If you are trading successfully in both patterns, do write to us below in the comment box.