206
Technical
Analysis
of the United States
Cannabis Market
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Rising Wedge:
Now that we have discussed the different types of triangles, now it’s time to take a look at their cousins; the wedges. A wedge typically comes in a rising and a falling pattern. We will start by examining the rising wedge. A rising wedge occurs when the prices are moving upwards, so bullish price movements. At first, the prices are rather volatile as they make their highs and lows. The prices continue to rise, but as they do the movements become less and less pronounced and thus make the chart become tighter and tighter. As these prices become tighter and tighter the pattern will eventually break which will trigger a signal? Can you guess which one? Is this bullish, or bearish? You might think it is bullish because we are already in a bullish price movement. But, you'd be wrong. This rising wedge is a bearish chart pattern to look for. The reason why is because the price is already bullish and increasing. If the chart were to break up then there would have an injection of steroids for the bulls to go on a buying frenzy. The likelihood of the buying pressure easing up for a minute makes the possibility of the chart breaking downwards more probable, and hence why it is bearish. One the pattern is identified and the prices start moving outside of the wedge that would be your confirmation to go short or exit a position. Of course, we would always recommend you pair this observation with other technical observation and your fundamental analysis.