Cunha: The Pattern That Traders Use to Predict Breakouts

If you were trading and lost money on fake breakouts, it's because you didn't know about wedges yet. I'm going to simplify this.

The Whole Thing in 1 Minute

A wedge is a chart pattern where the price is squeezed, compressed between two trend lines. The tighter it gets, the bigger the breakout when it moves out. It's like pressurizing a spring— the more you squeeze it, the farther it flies.

Ascending Wedge: The Fall's Pump

How to recognize:

• Price making progressively higher highs and lows
• Upper line (altos) flatter than the lower line (mínimos)
• Volume decreasing while the pattern is forming

What it means: It seems to rise, but it's a trap. When the price falls below the lower support, prepare for a strong drop.

Practical strategy:

• Sell when it breaks the lower support
• Stop loss above the most recent high
• Target: wedge height x 1 (same distance down)

Real case: A tech stock in 2023 formed an ascending wedge for 4 months. When it fell from support, it lost 25% in 2 weeks. Those who shorted made a lot of profit.

Descending Wedge: The Upward Explosion

How to recognize:

• Price making progressively lower lows and highs
• Lower line (minima) more inclined than the upper line (maxima)
• Volume weakening during the formation

What it means: The market has lost momentum, but it is close to a breakout. When the price breaks through the upper resistance, it rises strongly.

Practical strategy:

• Buy when breaking the upper resistance
• Stop loss below the most recent minimum
• Target: wedge height x 1 (same distance upwards)

Real case: Gold in 2024 formed a descending wedge. After breaking out of the top of the wedge, it rose 8% in days. Perfect timing.

The Details That Make the Difference

Volume is everything: The wedge only matters if the volume decreases during the formation and explodes upon breaking. Without volume, it's just a pretty pattern on the chart.

Timeframe matters: Wedge on hourly chart = hours trade. Wedge on daily/weekly chart = can last weeks/months and yield much more.

Not always successful: Combine wedge with other tools (support/resistance, momentum indicators, news). A pattern alone doesn't work miracles.

The Final Balcony

Cunha is basically compression → explosion. The longer it is compressed, the more violent the breakout. Use it with higher volume and timeframe for reliable signals. Good luck in your trades.