Rising Wedge Pattern (English)

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Episode
204 of 257
Længde
5M
Sprog
Engelsk
Format
Kategori
Økonomi & Business

The last monsoon I was trudging home on a somewhat flooded street when I saw a child standing on the sidewalk with tears brimming in his eyes and a heartbroken expression that could have melted an iceberg. I was about to ask him if he was stranded or if he needed help contacting his parents when I saw - wedged between an umbrella, a school book, and a pencil box - an icecream cone. Tilting downwards. The flood had washed away any evidence of a fallen dollop of icecream but it was clear (from the tilted cone, and the fact that the ice cream itself seemed to have broken free of its cone) that the boy's ice cream had fallen into the rainwater.

The rising wedge pattern reminds me of the tilted ice cream cone and the fallen ice cream. A downward tilting cone (or wedge) appearing as a set of trend lines on a stock graph acts as grounds for traders to predict that the stock price is going to fall. Of course, a second clue is required here too. Like the ice cream that had slipped out of its cone, when the stock price breaks out - by slipping below its recent lows - traders regard it as supporting evidence in favor of predicting a stock price decline.


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