The Broadening Wedge Ascending pattern forms when a security price progressively makes higher highs (1, 3, 5) and higher lows (2, 4), following two widening trend lines. This pattern may form when large investors spread their buying over a period of time.
When initial buying occurs, other market participants react to rising price and jump on the bandwagon to participate. Then value investors begin to sell, believing the price has risen too much, which spurs the original large investor to resume buying again. Once these activities stop, the price may break out in either direction.
If the price breaks out from the bottom pattern boundary, day traders and swing traders should trade with a DOWN trend. Consider selling the security short or buying a put option at the downward breakout price level. To identify an exit, compute the target price for this formation by subtracting the pattern height from the breakout price. The pattern height is the difference between the highest high and the lowest low. The downward breakout level is the last low that touches the bottom line (4).
To limit potential loss when price suddenly goes in the wrong direction, consider placing a stop order to buy back a short position or sell a put option at or above the breakout price.
Annuities are financial products sold by insurance companies, and they are designed to protect against life expectancy
Venture capitalists are now helping newer companies achieve success in return for large equity positions in the business
A Defined Benefit Plan involves a promise made by your employer to pay you a monthly “benefit” for the rest of your life
Home equity is a notional amount that a person owns at any given time, which is computed as the market value of a...
The Symmetrical Triangle Top pattern forms when a currency pair price fails to retest a high or low and forms two trend lines
Billing Statements are primarily used for credit cards, listing the transaction history and balance due on a customer account
The Federal Trade Commission (FTC) was originally created to encourage market competition and to protect consumers
Even if you are in the seller’s position in this situation, and are seeking to “capture” the dividend, you have to...
Bollinger Bands are used in technical analysis to discern what range a security is likely to trade within
Chapter 11 is a type of bankruptcy filing a company can make to give itself time to reorganize and hopefully continue