![]() ![]() It is just the vice versa of the bullish wedge. The breakout comes from the 6th or 7th spot, the spot number 3 or 4 could cause false breaks, before a breakout sometimes the market just retrace down and then it might continue. To make a wedge or triangle reliable we need to count seven spots on the boundaries. As they are not parallel they will try to go and meet each other. The bullish wedge must come at the end of down trend and it has to have both boundaries pointing down. (Note: Personally I don’t like to go against opposite divergences) If you want to take the possibility that the divergence will not hold and the market will continue until the next divergence and then retrace all the way, you can just close 80% of the trade and let the 20% work with moving the stop loss to break even ( To learn and master divergence click here). Generally when you have opposite divergence and candle patterns just get out of the trade. In the example shown in the screenshot below the price broke above the top of the flag and moved higher then the price has been blocked by a bearish divergence in such cases just get out of the trade. ![]() (Note: Flags are not always parallel they could be with different angles, we just need many spots as possible) We have a down move and then the price was moving inside a channel, then we look for the break of the low, close below it and then duplication from the very beginning. ![]() The channel flag is very similar to that of the side way flag but here it looks like a channel. The stop loss is placed at the middle of the flag and the target is measured from the lowest boundary and duplicate the line from the break The entry is with the breakout of the top (that is a close above the top) and here we don’t need to wait for the retest. The beauty of trading flags is the risk reward ratio. Note: Its not very important to remember the names, just look for double tops/bottoms don’t pay attention to the names like if it is Adam & Eve, Eve & Eve, Adam & Adam etc…įirst of all I want to see a trend and then I want to see a side way move, it is much better if you have at least one spike in the side way move which tells you that its a false break, then the next break will be much more reliable. We have the same rules here as well, the break of the high and then up for duplication. We have the same rules here as well, the break of the low and then down for duplication. ![]() There is no difference between this pattern and the classical one which I showed you earlier but here in this case we have a quick spike down then top which moves on the same area more than four or five candles at least. In the above example the spike is Adam and the big cycle is Eve. I prefer to look for this pattern from the very top or very bottom with patterns and divergences because I think this way we risk less for potential much bigger move. Stop loss is placed below the half way of the range and the target is duplication of the range from the level it broke up. Its just the vice versa for the double bottom, it must come after a down move, then it must break and then we join the trade. The target here would be twice bigger which will be the duplication of the range on the way it broke down (In strong trends, target could be also double the range). We always enter a trade with divergence ( To learn and master divergence click here), if its a double top then we enter with bearish divergence, bearish candle, etc… The classical way to trade the double top is by marking the highs and lows, then we look for the breakout of the low and then we sell with the stop loss above the half way of the range (or most recent high before the breakout, if available). If its a double top then it should come after an up move, whereas if it is a double bottom then I would like it to come after a down move. The classical way to trade the double tops/bottoms is as follows:įirst of all please remember that double tops/bottoms should come at the end of a trend.
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