Bearish Ascending Wedge--by Carl Swenlin

davidino

Bearish Ascending Wedge
by Carl Swenlin
May 8, 2009 An ascending wedge pattern forms when the top of a rising trend channel converges toward the rising trend line that forms the bottom of the channel. It is considered to be bearish because, rain or shine, the price line almost always breaks down through the rising trend line. It is one of the most reliably bearish patterns I know of. As you can see, there is a clear ascending wedge that has formed on the S&P 500 daily chart, and a price breakdown is virtually guaranteed to occur in a matter of days, if not hours. HOWEVER, "virtually guaranteed" is not the same as 100% guaranteed -- I have seen ascending wedges that resolved to the up side.

Another thing to consider is that, if a break down does take place, the duration and amplitude will probably be short term in nature, because the entire formation only covers about a two-month time span, and it is more shallow than steep. More important is the fact that the medium-term market behavior has been clearly bullish. Bottom Line: The ascending wedge pattern on the S&P 500 chart is a failry reliable signal that a short correction is due at any time. While it will make the bears happy at first, I don't think the correction will last more than a few days.

gege88

thx

happyface

Jimmylee

well said!
According to this essay, next target might be 970, and as cobra said that no 2 consecutive days pullback.

So buy did still is the rule for recent market?

lwjnbtx

buy dip with tighter stops as long as trend is still up. If you look at the chart, this Bearish Ascending Wedge was formed even in mid April, now almost another month past and trend is still up.

小亥

xiaoxiaozhang

billlogs

A bearish ascending wedge should be accompanied by volume down. The volume is up instead, so I don't think it is really bearish.

billlogs

Look at the chart, from mid Nov 2008 to early Jan 2009, that is a real bearish wedge with volume diminishing.