This time I will be showing you how to trade successfully the Falling Wedge – one of the best chart patterns in Forex. The video will demonstrate you the pattern in action and the consequences of its confirmation.
Falling Wedge Pattern Trade
- After a sharper price decrease, the price slowed down its intensity and it demonstrated sideways attitude.
- The consolidation had slight bearish inclination, though.
- However, the bottoms of the consolidation were decreasing with lower intensity than the tops.
- This created a Falling Wedge pattern on the chart.
- The confirmation of the pattern came with the Falling Wedge breakout through the upper level.
- This affirmed the bullish potential of the pattern, which was the reason to tackle the situation with a long trade.
- However, the breaking candle was bigger than expected and it achieved about half of the wedge’s potential.
- For this reason, I waited for a pullback before I entered the long trade.
Stop Loss and Target of the Bullish Falling Wedge Trade
I placed a Stop Loss order below the last top of the Falling Wedge. This way I protected my trade from eventual unexpected price moves against my trade.
Also, I followed the Rising and Falling Wedge rules to determine my target in this trade. I measured the vertical distance between the upper and the lower level of the Falling Wedge in its widest part. Then I applied this size upward starting from the moment of the breakout.
Live Trading Example
The entry point on the chart came a bit later than than I expected. It appeared that the price action created one more swing inside the wedge prior the breakout. Then I had to wait for a pullback in order to regain some of the already passed distance caused by the big breaking candle. Almost 4 hours later the target was completed.
Bottom line, the trade generated 10 pips which equals to approximately 0.15% profit.