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Pattern Types
Often, one of the following patterns as influencing the price action of a stock or market covered in AvidTrader research. Click on any pattern of interest for more information about its characteristics, its stages and real examples:
Channel
Double Bottom, Double Top
Head & Shoulders
Island
Rounding Bottom, Rounding Top
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Complex Triangle
Trendline Touch
Wedge
Pattern Stages
Breaking
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Correcting
False Break
Trending
Fallen Star
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Wedge
Trending is defined as higher highs and higher lows, or lower highs and lower lows. Eventually the trending becomes so expected by market participants that its corrections are shorter and shallower. And occasionally the trending becomes so expected that it runs out of sponsorship, and each new extreme is also shorter and shallower. The resulting pattern forms a WEDGE.
Volume declines as the WEDGE's develops. Volume should be slowest when the WEDGE's last extreme forms, as the trend runs out of sponsorship. Without too much delay, a sharp reversal on very heavy volume makes the first attempt to reverse the trend.
WEDGES are most likely to produce a sustainable reversal when they exceed a prior extreme during their formation. Ending at a prior extreme, or beginning after a prior extreme is broken, may still produce a reversal attempt, but usually not one that is sustainable.
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