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Bullish Patterns
Symmetrical Triangles
Ascending Triangles
Rectangles
Pennants
Flags
Wedges
Head & Shoulder Bottom
Cup & Handle
Trendlines

Neutral Patterns
Symmetrical Triangles
Rectangles

Bearish Patterns
Symmetrical Triangles
Descending Triangles
Rectangles
Pennants
Flags
Wedges
Head & Shoulder Top
Trendlines

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Wedges

Bullish wedges are small continuation patterns that represent brief pauses within an already existing uptrend. They are characterized by converging trendlines and have a definite bullish bias. They are similar to bullish pennants except where pennants are generally flat, wedges have a definite slant against the overall trend.

Bullish wedges typically appear in the middle of a large rally or immediately after a stock has broken out of a basing period.

Bullish breakouts should be accompanied by a significant increase in volume with appropriate stops used if this is not seen.

The price action prior to a wedge formation can be used as a guide in predicting the price movement upon breakout. So, for a bullish wedge in an uptrend to truly possess great potential, it must have been preceded by a significant move (i.e. if the movement into the pattern was quick and full of energy, the rally after the breakout most likely will be quick and full of energy).

The expected price movement upon breakout is approximately equal to the distance of the move into the pattern.




DOVP was in a steady uptrend when it traded into a downward sloping bullish wedge. This pattern is very similar to a bullish pennant except here both trendlines slant down. Volume popped on the breakout and was then fairly steady during the rally.



URBN traded into a textbook bullish wedge in the spring of '02. Three touches established both support and resistance and volume surged on the breakout. Pretty simple.



CRK was a herky jerky stock that traded into a downward sloping bullish wedge in the late summer months of 2003. Volume surged several consecutive days on the breakout, and that makes the pattern easier to trade because each of the highs from within the pattern can act as resistance on the way up. Getting a big explosive move that achieves “separation” from the breakout area is always desirable.


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