In this video we're going to take a look and wedgies and triangles and now wedges and triangles.
Kind of a barren topic but they all basically mean the same thing.
And what this means is that buyers and sellers are getting compressed and that we're meeting at a point.
And there are a multitude of different types of both.
There are at least five major ones so for triangles what you'll have is you'll have price compressing
bouncing around in two trend lines that are competing.
This is a symmetrical triangle and it is like all triangles a constriction of price constriction of
energy and needs to be broken.
By the time you hit the 80 percent of the way to the apex.
So as we start this pattern you draw two trend lines and if you get past this 80 percent Apex then it
loses its inertia and just kind of peters out it was big the nice thing about triangles and this is
going to be true with all of them don't matter which flavor one hundred is let's say how many points
or ticks or pips or whatever that this triangle makes.
Once you break out of this in either direction you measure one hundred points from that trend line break
for your target.
There are also two other types of triangles that are quite common.
There is the ascending and this simply means the price is gradually going higher.
It's running into significant resistance at say 900 here at a specific level.
And this suggests that we are going to break out to the upside because the buyers are becoming more
and more aggressive soon as we close above this trend and this sideways resistance line we start to
measure.
Same thing over here.
If it is 100 points or 100 pips or whatever we're looking at a gain of one hundred from the breakout
there's also the descending triangle which is just simply sellers becoming more aggressive and then
finally they break through a resistance once they break through a resistance.
You're looking at a loss of whatever the measurement is.
Now remember again we want to see this happen before 80 percent to the apex.
The point where these two lines intersect so in this case you can clearly see that there is an uptrend
line being formed there and there's resistance here on Amazon and you can see that this 80 dollar hike
right here was in fact hit pretty classic ascending triangle here and Citigroup.
We had a descending triangle as shown by the trend line here and the gap you have to keep.
In this case this is a little bit special case because a gap should be thought of as a big green candle.
You see we came down with balance a couple times and then eventually broke down.
You can also see clearly that we hit our target.
So again think about what's happening here.
The sellers are overwhelming the buyers.
The buyers finally give way and they have to close their positions which just speeds up the process
going forward allowing for a fulfillment sometimes much quicker than you potentially think can happen.
And finally we have the symmetric triangle symmetrical triangle as you can see on deer here on the weekly
chart there's a trend line there and there's a trend line there.
We break out above there we're looking for.
Well you know let's just call it thirteen dollars so thirteen dollars from the break out of eight eighty
I should say is ninety three and you see we did in fact fulfill that target you'll see this time and
time again triangles are by far probably one of the most commonly traded patterns.
Now I also mentioned wedges and wenches are very much like triangles there's only two that we'll focus
on here there is the rising and the descending wedge and what's happening here is that we are getting
buying pressure but it's starting to tighten up like a spring.
It's got a little bit of a tilt to it.
That being said when you break the down line are the uptrend line you break down through it then you
start looking for the bottom of the pattern because these people who had been buying are running into
overhead resistance and finally capitulation.
Same thing with a falling wedge.
You know we're we're falling in the market and then all of a sudden for whatever reason the sellers
run out of momentum we started aiming for the top of this pattern.
These are relatively common patterns.
They aren't as common or as highly traded as triangles but they are worth paying attention to so here
in John Deere we have a little bit of a rising wind here.
You can see that there was certainly upward pressure here on this trend line and you can definitely
see that there was a bit of resistance here at this trend line.
And look what happened.
We ended up breaking through it on this candle pretty pretty quietly it wasn't as eventful of a move
that you would think then we dress or lower and then gapped down to hit this figure here and here we
have a falling wedge in Goldman Sachs but you can see there's a little bit of a trend line there.
And there's trend line there.
Well we break through it.
Not only do we hit this target but we gap into it and continue to go much higher so these are relatively
common patterns.
I would say of course triangles are probably more reliable than where just just because they're easier
to spot wedges tend to be a little convoluted at times and sometimes you have to use a little bit of
artistic license.
They are tradable though they are very tradable event.