Rising Wedge in nifty - bearish

11 ก.ค.

A rising wedge is a bearish chart pattern that typically appears at the top of a mature uptrend. Here are the key characteristics and considerations:

Preconditions:
A strong, mature trend in the background (multi-day/week).
Wave HH1 (higher high) should be significantly smaller than the subsequent wave H.
HH2 (another higher high) should be smaller than HH1.
The HH-HL (higher high - higher low) structure results in a rising wedge or arrowhead.
It usually appears at the potential top of a rally.
Volume Characteristics:
Volume during HH1 is generally lower than the volume during wave H.
Volume during HH2 is less than that during HH1.
Volume during wave LL (lower low) should be higher than the volume during wave HL (higher low) and L (lowest low).
Confirmation:
The pattern is confirmed when wave LL breaks below the low of wave HL.
Psychology:
Weak character of waves HH1 and HH2, along with shortening length and lower volume, suggests waning buyer interest.
Breakout buyers may get trapped above H and HH1.
A sharp wave LL with increasing volume indicates sellers taking control, potentially leading to a medium to long-term top.
Trading Strategies:
Consider booking profits (full or partial) in any long position when the pattern breaks below HL.
Risk-takers might short at the break of HL, but be cautious about wide stop-loss levels (above HH2).
Others can wait for a pullback on the upside (after the break of HL) to take short positions.
Always aim to minimize risk, either by reducing position size or other risk management techniques.
Remember, this pattern is significant when it appears at fresh high grounds (new all-time highs) or in previous areas of resistance. Keep an eye on the context and other technical factors for a well-informed trading decision1