Triangles | Symmetrical broadening wedge | ||
Wedges | Broadening wedges | ||
Flags and pennants | Right-angled broadening wedge | ||
Head and shoulders | Double (or triple) tops (or bottoms) |
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Rectangles | Cup with handle |
The wedge is formed by a channel that narrows in the direction of the trend. It is a reversal pattern that suggests that the forex trend is weakening, as it is characterized by a progressive reduction in the amplitude of the waves and the transaction volume.
The break of a support line provides a good signal to trade on a retracement with a price target at the top of the first wave for a falling wedge or at the bottom of the trough for a rising wedge.