Broadening Wedges, Descending

A bullish reversal pattern formed by two diverging downward slants is a descending broadening wedge. To validate an descending broadening wedge, there has to be an oscillation between the two lines. Each line has to touch at least twice for this validation.

The pattern will mark the shortness of sellers. It is characterized by a progressive reduction of the amplitude of the waves. Actually the pattern appears like a bearish channel on which the slope of the resistance is becoming straight as far as the movement moves forward. In this pattern, the trend is bearish but sellers are attempting to retain control.

The target price is given by the lowest point that results in the formation of the wedge.

Look at the graphical representation of a descending broadening wedge:

Descending Broadening Wedge