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16B slide 11
1. Are the 2 wedges correctly labeled?
2. What does significance does a nested wedge have?
3. Is the final Leg a Parabolic Wedge?
4. What significance does a Parabolic Wedge have?
I'd suggest you pay very close attention to this example in particular. This discussion is loaded with information, very easy to miss something important out. Coming to your questions:
1. Are the 2 wedges correctly labeled?
Yes. Any 3 push patterns are wedge - it's better if they look good as more computers will pay attention to them in that case. So, essentially, even a double bottom and a failed BO below a double bottom is also a wedge.
2. What does significance does a nested wedge have?
Nested wedge has a little higher probability of working primarily because of 2 reasons - first is since, there are 2 or more wedges in the general price area, many computers will see at least one of the wedges and a lot of computers of different institutions will try to do the same thing. The second reason is, nested wedges essentially mean there is a wedge in the general price area on a higher time frame chart as well - when the current chart and the higher time frame chart are trying to do the same thing, chances of a setup working increases.
3. Is the final Leg a Parabolic Wedge?
I don't think it is. Parabolic wedges are essentially 3 climaxes in a one direction(up or down) - what you get as a result is a parabolic wedge.
4. What significance does a Parabolic Wedge have?
When the market is having consecutive climaxes, it is unsustainable behavior and can not last long. This means, that the market will soon enter into a trading range or a reversal soon. When having many consecutive climaxes, chances of getting a reversal and not just a trading range significantly increases.
Parabolic wedges are essentially 3 climaxes in a one direction(up or down) - what you get as a result is a parabolic wedge.
Isn't there three climaxes downward, as indicated by the red arrows? Or is that a normal wedge?
Is the following example a Parabolic Wedge?:
re: Parabolic or not. I believe it is. What makes it parabolic is the fact that the rallly of the third leg up exceeds the channel line generated by the previous two previous rally highs. That's how I remember Al describing it in one of the videos and how I always relate to the pattern.
Please be sure to have one of the Senior Member chime in though and confirm.
