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Day trading strategy for Triangle, Pennant and Price wedge
This morning
we saw many high-percentage-trades
on our favorite futures markets including one specifically on Crude Oil that
was an excellent example of what we look for when trading a pennant, triangle
or price
wedge.
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| Crude Oil Price Wedge, Flat, Pennant Breakout |
In today’s video you
will learn the correct way to look for a breakout of a price wedge. Remember to join the free trial so you can
attend our Live Trade Room Open House and learn more about our trading
strategies.
important aspect of trading a price wedge or pennant pattern is to understand
the market-personality
that creates it on our charts. A pennant,
flag, triangle or price wedge pattern is formed with lower-highs and higher-lows
as price ‘consolidates’ into a narrower range each time the highs and lows fail
to be broken successfully.
to find a price wedge on your chart because the pattern really stands out to
look exactly like it sounds….a ‘wedge’ or ‘triangle’ on your chart.
mistake among new traders using a price wedge is to try and trade the breakout
as soon as it makes new high-highs or lower-lows. We never want to try and trade the initial
breakout of a pennant, flag, or price wedge pattern because the market-personality
is such that we will most likely see a fake-out breakout and a loss on the
trade. Yes, we do see many successful
initial breakouts on a price wedge but they are very hard to take consistently.
waiting patiently to see if a breakout will keep going, and then we seek to
find the entry.
favorite trades using a flag, pennant or price wedge pattern is to sell the
highs and buy the lows. Considering the market-personality
says ‘fake-out
breakout’ we know that selling the highs at resistance and buying the
lows at support will always provide easy trading opportunities that will help
us reach our daily profit-target.
trade a price wedge is to sell the highs and buy the lows, being careful not to
trade in the MIDDLE.
more advanced technique for trading a breakout of a flag, pennant or price
wedge pattern is to identify the swing-high or swing-low that created the price
wedge. We seek to find the highest point
and lowest point of the price wedge, and use that as the support
& resistance to trade around.
If prices make a new higher-high
we don’t want to buy long if we aren’t above the swing-high of the price wedge
and the same is true for a short trade that does not exceed the swing-low.
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| Selling Retracements on Euro |
Once we see
a breakout of the flag, pennant or price wedge we then wait to buy
pullbacks for a long and sell retracements for a short. If we are buying pullbacks we need to make
sure the BUY is above the swing-high. If
we are selling
retracements we need to make sure the SELL is below the swing-low. If we follow this simple trading rule we can
avoid the fake-out breakouts that come with a flag, pennant or price wedge and
we will hit our daily profit-target more often.
we need to make sure the BUY is above the swing-high. If we are selling retracements we need to
make sure the SELL is below the swing-low
