Skip to main content
Track Triangle pattern
19 / 33
Search the archiveLibrary
Library

2004issue C111-4

Construct a corrective rising wedge before treating it as a short

A rising wedge is two converging trendlines of unequal slope. The construction first classifies the advance as corrective or impulsive, then uses a Fibonacci retracement peak band and momentum divergence around any later breakdown.

  • A rising wedge is two converging trendlines of unequal slope, with the lower line rising more steeply than the upper, so successive higher highs do not keep pace with successive higher lows.
  • Classify the same converging advance as impulsive when it forms inside a larger uptrend making new highs, and as corrective when it is a smaller rally against a larger downtrend that stays below the high that started that decline.
  • Confirmation is two price steps: a break of the rising lower trendline, then a print below the key prior reaction low, because the rising lower line still implies an upward bias until it gives way.
  • After confirmation, the formation low is the minimum downside objective, and a measured move that subtracts the first decline from the wedge peak is the second objective.
Entries in this reading3 entries
Current trackTriangle pattern55 readingsFibonacci retracement97 readingsPrice-indicator divergence142 readings

What a rising wedge is

A rising wedge is constructed with two converging trendlines of unequal slope. The lower line rises more steeply than the upper, so successive higher highs do not keep pace with successive higher lows.

That structure is a converging two-trendline price pattern built from higher highs and higher lows whose unequal slopes close toward a point. The same shape can describe either a corrective rising wedge or an impulsive rising wedge.

Classify the advance first

The same converging advance is classified as impulsive when it forms inside a larger uptrend that is making new highs, and as corrective when it is a smaller rally against a larger downtrend.

An impulsive rising wedge is a rising, converging advance that forms in harmony with a larger uptrend, especially one that is already making new highs. A corrective rising wedge is a rising, converging advance that retraces only part of a larger decline and remains below the high that started that decline.

A corrective rising wedge is built to peak below the high that started the prior decline. A move through that prior peak would reclassify the advance as impulsive.

Locate the typical peak

The typical peak zone is a Fibonacci retracement of 38 percent to 62 percent of the prior decline. That 38 to 62 percent peak band, taken from the 38.2 and 61.8 ratios, is used to locate a typical end for a corrective advance against a prior decline.

The band is used as an alert rather than a hard cap. More volatile instruments are described as more likely to reach or overshoot the 62 percent end while still remaining below the prior peak.

Read volume as conviction, not as a requirement

Low volume during the wedge is preferred but not required and is treated as weak conviction in the advance. Volume expansion on a break of the lower trendline is presented as consistent with that reading.

Confirm in two price steps

Confirmation is constructed in two price steps: a break of the rising lower trendline, and then a print below the key prior reaction low. The rising lower line still implies an upward bias until it gives way.

Use divergence to anticipate the turn

A bearish price-indicator divergence, such as a new price high against a lower MACD high, can anticipate the turn. That split between a new price high inside the wedge and a lower high on a momentum measure such as MACD is used to anticipate that the advance is losing force.

A signal-line crossover or a move into negative territory can then confirm the trendline break or the lower low.

Project after confirmation, and mark failure

After confirmation, the formation low is treated as the minimum downside objective. A second objective is a measured move that subtracts the first decline from the wedge peak, switching to percentages when an absolute subtraction would imply a price below zero.

The construction is treated as failed if price reclaims the broken trendline or prior low and then breaks above nearby resistance.

The same construction, confirmation, and projection steps can be applied on intraday, daily, weekly, and monthly charts.

Merck weekly: rising wedge into 63.45, then the confirmation break

After the July 2002 low at 38.5, Merck built a rising wedge of higher lows and printed the 63.45 reaction high Hill cites. Losing the last of those higher lows near 51 is the two-step confirmation in the article; the stock then gave back the whole advance and finished near 41. Swing points were read from the weekly StockCharts figure; 38.5 and 63.45 are the prices stated in the text.
After the July 2002 low at 38.5, Merck built a rising wedge of higher lows and printed the 63.45 reaction high Hill cites. Losing the last of those higher lows near 51 is the two-step confirmation in the article; the stock then gave back the whole advance and finished near 41. Swing points were read from the weekly StockCharts figure; 38.5 and 63.45 are the prices stated in the text.MRK · Weekly · 2002-05-01T00:00:00.000Z to 2003-12-31T00:00:00.000Z

Hill’s MACD(12,26,9) pane is not redrawn on this price axis. He records a lower MACD high of 1.686 against the 63.45 price high, an earlier MACD high of 1.706, and a final MACD of −2.85 as the breakdown moved into negative territory.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
19 of 33 in the Triangle pattern track
20041-4 pp.Next on Triangle patternA continuation triangle with Fibonacci targets and an apex stopTriangles and wedges are treated as continuation consolidations, so a breakout can serve as the entry and a Fibonacci-ratio calculation as the planned exit zone.
All readings on this track · 33 readings
  1. 1986Gold as a double zigzag before a contracting B-wave triangle
  2. 1990Scoring competing wave counts after a crash
  3. 1992Pre-trade checklist for trendline and triangle signals
  4. 1995Chart patterns as tactics, not strategy
  5. 1996Constructing Elliott wave counts with triangles and Fibonacci
  6. 1996A price-channel case study with a pending triangle signal and a planned stop-loss
  7. 1996Expanding triangle as a dual-label fourth-wave reversal worksheet
  8. 1997Rising wedge construction, breakout, and volume
  9. 1997Confirm structure and conditions before naming a Triangle pattern
  10. 1999Drawing the Triangle pattern before Breakout confirmation and the Stop-loss order
  11. 2000Four-phase market cycle triangle breakouts
  12. 2000Continuation triangles as a three-lock experiment
  13. 2001Folding rule: stacking three trendlines on an accelerating swing
  14. 2003A scored symmetrical triangle on a utility stock
  15. 2003Constructing wedges versus flat-boundary triangles
  16. 2004Testing triangle breakouts against volume filters
  17. 2004Mute triangles, histogram force, and trader optimization
  18. 2004Constructing falsifiable reversal and continuation patterns
  19. 2004Construct a corrective rising wedge before treating it as a short
  20. 2004A continuation triangle with Fibonacci targets and an apex stop
  21. 2005Pre-breakout filters for classic chart patterns
  22. 2005Reverse trendlines as a geometry lab for convergence and expanding triangles
  23. 2005Volume shapes versus triangle and double-pattern breakouts
  24. 2005A nested-pattern checklist on the 2005 euro
  25. 2005Volume test for a descending triangle breakout
  26. 2010Constructing triangle, broadening, and head and shoulders patterns
  27. 2011Treat a numeric pattern rank as a shortlist
  28. 2011Evaluating the head-and-shoulders as a falsifiable reversal
  29. 2013Auditing chart patterns by the first post-breakout swing
  30. 2014A three-gate entry for a triangle pullback
  31. 2014Golden triangle: a 50-day pause that still needs both gates
  32. 2014The triangle qualifier came after the rating pre-screen and the fifty-day bounce
  33. 2018Aligning daily, weekly, and monthly triangles with trendlines and Fibonacci retracements
By fieldChart patterns222 readingsBy year2004107 readings
All 55 readings tagged Triangle pattern
Also on Triangle pattern5 readings
1986Gold as a double zigzag before a contracting B-wave triangle1990Scoring competing wave counts after a crash1996Constructing Elliott wave counts with triangles and Fibonacci2004A continuation triangle with Fibonacci targets and an apex stop2018Aligning daily, weekly, and monthly triangles with trendlines and Fibonacci retracements