Below is a slider quiz to test your ability to identify falling wedges and trade them. Captions appear below the pictures in red for guidance, so be sure to scroll down far enough to read them.
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This is a falling wedge (C). Price follows two converging and descending trendlines which join at an apex sometime in the future. The volume trend is downward 75% of the
time leading to the breakout. In this example, the only hint of a falling volume trend are the three volume spikes at B (otherwise it looks flat). The measure rule, which is really a
guideline, says price should rise (for an upward breakout) at least to the price at the top of the pattern (C). A downward breakout happens at A, and that's unusual because it occurs just 32% of the time.
Here are the patterns. A and B are the falling wedges. CD is a double top. E is the V-bottom and F is a diamond even though I cut through the top spike. Yes, you may have
to use your imagination on the diamond...