INTERMEDIATE AND ADVANCED CHART PATTERNS

With this course we want to take a look beyond the usual chart patterns and show you the
possibilities that will open up to you if you understand formations like the Rising Wedge, Bull
Pennant or the Bat Formation.

In this course you will learn:

 7 intermediate chart patterns

 8 advanced patterns

Rising wedge
This lesson shows you how to identify the rising wedge pattern and how you can use it to look
for possible selling opportunities.

The price is confined within two lines which get closer together to create a pattern. This indicates
a slowing of momentum and it usually precedes a reversal to the downside. This means that you
can look for potential selling opportunities.
Identifying the rising wedge pattern in an downtrend

A rising wedge in a downtrend is a temporary price movement in the opposite direction (market
retracement). As in the case of a rising wedge in a uptrend, it is characterised by shrinking prices
that are confined within two lines coming together to form a pattern. It indicates the continuation of
the downtrend and, again, this means that you can look for potential selling opportunities.

The charts below show an example of a rising wedge pattern in a downtrend:

Trading the rising wedge: method one

Once you have identified the rising wedge (whether in a uptrend or downtrend), one method you can
use to enter the market with is to place a sell order (short entry) on the break of the bottom side of
the wedge. In order to avoid false breakouts, you should wait for a candle to close below the bottom
trend line before entering.

The chart below demonstrates the area where price breaks the lower support trend line and where
you should place the sell order:

1. Area where price has broken the lower support trend line

1. Sell order (short entry)

2. The chart below shows where you should place the stop loss. This is placed above the top
side of the rising wedge.
 3.

4.

1. Area where price has broken the lower support trend line

1. Sell order (short entry)

2. Stop loss

Finally, the last chart shows the profit target. This is measured by taking the height of the back of the
wedge and by extending that distance down from the trend line breakout.
 1. Area where price has broken the lower support trend line
2. Back of the wedge
3. Distance between entry (sell order) 1 and take profit 3 (this is the same height as the back of
the wedge 2)

1. Sell order (short entry)

2. Stop loss
3. Take profit

Trading the rising wedge: method two

The second way to trade the rising wedge is to wait for the price to trade below the trend line (broken
support), as in the first example. Then, you should place a sell order on the retest of the trend line
(broken support now becomes resistance).

The chart below shows how to place the sell order:

 1. Point at which the price finds resistance at the lower part of the wedge.

1. Short entry

The stop loss would go above the new resistance area, as shown by the following chart:
 1. Point at which the price finds resistance at the lower part of the wedge.
2. Back of the wedge
3. Distance between entry (sell order) 1 and take profit 3, same height as back of wedge 2
4. Sell order (short entry)
5. Stop loss
6. Take profit

Summary
 he rising wedge pattern signals a possible selling opportunity either after an uptrend or
during an existing downtrend.
 … the entry (sell order) is placed either when the price breaks below the bottom side of the
wedge or the price finds resistance at the lower trend line.
 … you can place the stop loss above the back of the wedge.
 … the take profit target is measured by taking the height of the back of the wedge and by
extending that distance down from the entry.