Below is a slider quiz to test your ability to identify ascending broadening wedges and trade them. Captions appear below the pictures in red for guidance, so be sure to scroll down far enough to read them.
1 / 7
This is an ascending broadening wedge. I don't like these patterns because they are tough to find. You'll learn that in this quiz. Look for price to
rise following two up-sloping trendlines. The lines diverge and yet there should be at least five touches of the two trendlines, three touches of one trendline and two of the other.
Price should cross the pattern plenty of times, filling it. Volume typically trends upward 65% of the time, as this example shows.
2 / 7
Find as many ascending broadening wedges as you can. Good luck. You're going to need it. For help, click here.
3 / 7
Here's the wedge, tucked in the left corner. Point A is a partial rise which correctly predicts a downward breakout 60% of the time. That's
not far above random, but every clue helps. In this case, it was correct when price broke out downward at B.
4 / 7
Try again. Find as many ascending broadening wedges as you can. These two are obvious.
5 / 7
Surprise! There's only one wedge in the picture. How many trendline touches does it have? We're looking for minor highs and minor lows to touch the trendlines.
The point I'm making is that point A, where the red line bumps up against price, does NOT count as a trendline touch because there is no minor high at A. The minor high/low rule applies
to all chart patterns. Point B is another partial rise. The breakout is downward. How far will it drop? The next chart helps answer that.
6 / 7
How far will price drops before it reverses direction? This is the weekly chart of the stock. Pick a number associated with a green line, or any other value you think is correct,
where you expect the stock to reverse.
7 / 7
Here's the answer. If you picked 24, you were correct.
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