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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
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Bulkowski's Rising Wedge

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 12/02/2016
19,192 68.35 0.4%
9,037 55.55 0.6%
627 -6.01 -0.9%
5,251 -72.57 -1.4%
2,192 0.87 0.0%
YTD
10.1%
20.4%
8.5%
4.9%
7.2%
Tom's Targets    Overview: 11/30/2016
18,700 or 19,300 by 12/15/2016
8,650 or 9,200 by 12/15/2016
650 or 605 by 12/15/2016
5,130 or 5,400 by 12/15/2016
2,150 or 2,300 by 12/15/2016

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 811 to 826.

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Rising wedges, especially for downward breakouts, are some of the worst performing chart patterns. Downward breakouts have unacceptably high failure rates and small post breakout declines. Also, pullbacks occur almost two-thirds of the time and throwbacks happen almost three-quarters of the time.

Rising wedge chart pattern
Rising Wedge Chart Pattern

 

Rising Wedge Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 18 out of 23; 20 out of 21
Break even failure rate for up/down breakouts: 8%; 24%
Average rise/decline: 28%; 14%
Throwback/pullback rate: 73%, 63%
Percentage meeting price target for up/down breakouts: 58%, 46%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Rising Wedge Identification Guidelines

CharacteristicDiscussion
Price trendCan be any direction leading to the pattern.
ShapeA narrowing and rising triangle shape.
TrendlinesPrice bounces between two up-sloping and converging trendlines.
TouchesPrice should touch each trendline at least five times to outline a good pattern. That's 3 touches of one trendline and 2 of the opposite.
Duration3 weeks is the minimum duration, otherwise it's a pennant.
Volume trendTrends downward at least 74% of the time until the breakout.
BreakoutCan be in any direction but is downward 69% of the time.
ConfirmationThe pattern confirms as a valid one when price closes outside one of the trendlines.
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Rising Wedge Trading Tips

Trading TacticExplanation
Measure ruleFor downward breakouts, the lowest valley in the pattern (A) is the price target. Alternatively, compute the height from the highest peak (B) to the lowest valley (A) and then multiply it by the above “percentage meeting price target.” Add it to (upward breakouts) or subtract it from (downward breakouts) the breakout price (the point at which price crosses the trendline, shown in the Measure Rule figure to the right as a blue line for this downward breakout) to get a price target (C).
BreakoutThe average distance to the breakout is 58% to 64% of the way to the triangle apex (where the trendlines join).
ConfirmationWait for a close outside one of the trendlines before taking a position.
Throwbacks and pullbacksThrowbacks and pullbacks hurt performance.
WeaknessUpward breakouts may show weakness two weeks after the breakout.
WidthWide patterns perform better than narrow ones.
Rising wedge measure rule
The Measure Rule

Rising Wedge Example

Rising wedge chart pattern example

The above figure shows an example of a rising wedge chart pattern. Each trendline has at least three distinct minor high or minor low touches, sandwiched between two converging trendlines. The upward breakout from this rising wedge is unusual because of its rarity. A throwback follows the breakout in this example.

-- Thomas Bulkowski

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Other Rising Wedge Examples

See Also

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. If opportunity doesn't knock, build a door. -- Milton Berle.