Whats the difference between...

Discussion in 'Technical Analysis' started by cashmoney69, Jun 5, 2006.

  1. Whats the difference between a

    ascending/ descending wedge ?, and a

    ascending and descending triangle?

    They seem very much the same.

    - nathan
  2. Hi cashmoney69,

    This site has some easy to visualize examples...


  3. ===============
    Helpful question, helpful link.

    Uptrend =higher highs, higher lows.

    Dopwntrend =lower highs ,lower lows.

    Dont see much '' bullish on the falling wedge,'' unless its real small time frame; they dont have a time frame listed, so thier bullish on falling wedge with 3 lower highs, 3 lower lows, would have to be a real small time frame.
    It does finally uptrend on 4th move.

    Maybe they could mean 3 days down [lower highs., lower lows on thier falling wedge could be bullish???];
    patterns without numbers, just dont say much to me, maybe they see something I dont?????

    Without numbers or larger context they could see a great deal i dont on patterns.:cool:
  4. Further investigation on thier website does show a clear better example on HLTH with specific numbers;
    DEC 2002 was a downtrend [wedge]month in a long term investors uptrend.:)
  5. Pekelo


    They break out to the opposite site, usually, but not always.

    Ascending triangle>>breaking out upward

    Ascending wedge >> breakout to the downside

    Also a triangle has a clear horizontal line that first act as a resistance (ascending triangle) then it becomes support...
  6. hcour

    hcour Guest


    One way you might want to look at wedges and triangles is instead of looking at the patterns, consider the price action that creates the patterns. In the early part of the last century, well before Edwards & Magee (and I'm not trashing E&M, it's a great book), Richard Wyckoff dissected price/volume behavior in terms of principles as opposed to patterns. Wyckoff used trendlines, channels, and trading-ranges to determine supply/demand and whether accumulation or distribution was occurring.

    I think of a rising wedge as a loss of momentum in an uptrend and a triangle as diminishing volatility w/in a consolidation. That's the difference. I don't know if this is a standard interpretation, this is simply my observation according to Wyckoff pv principles. Say you have an uptrend that is in a nice, well-established channel. Then at some point price bounces off the lower channel line, the demand line, just as it has previously, and attempts to rally back to the top of the channel, the supply line, and makes a new high relative to the previous swing, but it only makes it half-way, to mid-channel, before reacting back to the demand line. Now you can say this may be the start of a wedge, and it may be, but what is happening is that price is losing its momentum relative to what was happening previously in the trend, what Wyckoff called a (possible) Change of Character in the price action. If price bounces off the demand line once again, and then once again makes a higher high, but this time an even more shallow rally back to the channel supply line before reacting once again to the demand line, you have a wedge, or a further loss of momentum in the trend. This Change of Character warns you that something different is happening w/in the uptrend as opposed to previous price action. It's not necessary to draw a "wedge" (just as it's not necessary to really draw a tl) or even call it a wedge, unless that helps you personally to clarify it. What's important is the price behavior.

    A triangle, otoh, is what Wyckoff simply referred to as "apex", which reflects the continuous cycle of high to low volatility, a narrowing of price action in a consolidation or trading-range, suggesting that the supply/demand tug-of-war that has been going on during the consolidation is coming to a head and is due for a breakout/breakdown. If you look at your typical trading-range they generally start off w/high volatility as they first come off a trend: Volume is high, price bar spreads are wide, price swings are wide, this is climatic action. Then at some point price starts to settle down, the swings from range high to low start to contract relative to the earlier behavior, volume diminishes, price bar spreads narrow, there may be lots of "dojis" (narrow bars closing in the middle of their range) and an apex forms. Wyckoff didn't consider "ascending" or "descending" triangles, instead he tried to analyze the price action w/in the trading-range that preceded the apex as either accumulation (or re-accumulation) or distribution (or re-distribution) to determine the outcome of the apex.

    Many folks draw a channel as it becomes established, then become frustrated because the channel is broken to the upside or downside, or it does not follow-thru to the extreme of the channel, but the trend still continues. So they draw new channels, new trendlines. These may or may not be valid, but I would suggest that if a channel is well-established, instead of drawing new lines everywhere, first look at the nature of those breaks. Do they form a classic "wedge"? Or perhaps a sloppy wedge (which is why I prefer pv principles over patterns), where price breaks the demand line successively deeper on each reaction, while the rallies are successively more shallow. What's important here is not so much the "wedge", but that there is a change of character of price action w/in this established trend.

    So you may get more value out of "patterns" if you try to understand the price action that creates them. That is where their true value lies, imo.