Descending wedge in an uptrend: a reliable sign or a deceptive hope?

I stare at the charts for hours, trying to catch that moment when the market gives a signal. And here it is - a descending wedge on an upward trend. You know, it's like the calm before the storm, when the price slows down but is about to surge. At least, that's what all those technical analysis books promise.

My Personal Experience with Descending Wedges

Honestly? A descending wedge in an uptrend is one of my favorite patterns. When I see two trend lines narrowing down after a good rally, excitement awakens inside me. This pattern usually signals the end of a correction and the resumption of bullish movement. But how many times have I burned myself by opening a position too early!

Theoretically, everything looks perfect: the price moves within narrowing support and resistance lines, volumes are dropping, and then - bam! - a breakout upwards and a sharp rise. But the cryptocurrency market is a brutal thing; here patterns work by their own rules.

How I Identify a Real Descending Wedge

When I trade and see the formation of a wedge, I pay attention to several things:

1. Trend lines must converge - wide part at the top, narrow at the bottom.
2. There must be at least two touches on each line within the wedge.
3. Volume usually decreases as the wedge forms

And the most important thing is the context! A descending wedge in an ascending trend is indeed a bullish pattern. It shows that the bears are losing control and the bulls are ready to return to the battlefield.

Why wedges sometimes don't work

It annoys me when experts talk about wedges as if they are a hundred percent signals. Nonsense! I've seen so many false breakouts that I've learned to be skeptical of them. The problem is that large players are well aware of these patterns and often manipulate the price to trigger the stops of trusting traders.

Moreover, in the cryptocurrency market, wedges often form faster and break more chaotically than in traditional markets. There are times when it seems like a perfect wedge, all conditions are met, but the price breaks through the lower boundary and plummets down instead of going up as it should according to theory.

How I Use Descending Wedges in Trading

When I see a descending wedge in an uptrend, I don't rush to buy immediately. First, I wait for confirmation - a breakout above the upper line with increased volume. After the breakout, there is often a pullback to the line that was previously resistance but has now become support. That's where I enter.

I set the stop-loss below the last local minimum within the wedge, and I take the target as the distance from the widest part of the wedge and project it from the breakout point. It often works, but not always.

My conclusions about wedges

A descending wedge in an uptrend is indeed a powerful bullish signal. However, I would advise never to trade based on just one pattern. I always combine wedge analysis with other indicators - RSI, MACD, Fibonacci levels. And most importantly - watch the volume! Without an increase in volume, the breakout may turn out to be false.

And yes, stop believing every "guru" who promises golden mountains from trading based on patterns. Technical analysis is about probabilities, not guarantees. I have confirmed this on my own wallet.

But when the wedge works correctly... it's just an amazing feeling. It's as if for a moment you were able to read the market's mind.