As the price action continues to rise, the trading range tightens, indicating less buying pressure pushing the stock in an upward direction. Traders should be cautious when they see the rising wedge form. This contraction is reflected in the slope of two rising and converging trend lines plotted above and below the price action. The rising wedge is formed when a stock’s price rises, but instead of continuing its upward trajectory, it contracts as the trading range tightens. The pattern can break out up or down but is primarily considered bearish.
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