3.13 Difference between Wedges and Triangle chart patterns

 
Both wedges and triangles are formed when you have support and resistance lines and they converge together to form a triangular shape. Please note that in both the cases we only have two lines while a real triangle needs to have three. The third line is an imaginary line joining the starting point of the resistance and support lines.
 
Let's have a look on some of the wedges and triangles on trading charts.
 
Triangles on chart.
Wedges on on charts.
 
 

Difference in the shapes

 
The support and resistance lines in triangle pattern either slope in opposite direction, i.e. in symmetrical triangle the support line slopes upwards and resistance lines slopes downwards, or one of these lines remains horizontal and other slopes upwards or downwards.
 
Both, the support and resistance lines, in a wedge chart pattern slope in the same direction i.e. either downwards or upwards.
 

Difference in trading with Triangle and Wedge patterns

 

Wedges

 
In case of wedge patters, most of the time the breakout direction is predictable and these are as follows:
 
 
  • A rising wedge after an uptrend is a reversal pattern and hence most of the time there is a downward breakout.

 

  • A rising wedge after a downtrend is a continuation pattern and hence you can go for short-selling.

 

  • A falling wedge during an uptrend is a continuation pattern and hence you can look forward to an upward break. 

 

  • A falling wedge after a downtrend is a reversal pattern and hence you can be ready for a breakout on the upside.
 

Triangles

 
In case of triangle patterns, most of the time the breakout direction is difficult to predict and it is better to be ready for a breakout on either side.

 

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