Broadening Ascending Wedge (BAW)

The Broadening Ascending Wedge (BAW) is a less well-known pattern than others, but it frequently appears in the crypto market.

This pattern comprises at least five swings between two ascending broadening trend lines, and volume typically increases while in the pattern. For those wishing to trade within this structure, it should be treated as a bullish pattern with long trades being an option from point D up to the highest high of the BAW.

However, despite the appearance of a bullish pattern, the overall pattern is a bearish continuation pattern. An aggressive short entry can be taken at the highest high of the pattern, particularly if a Swing Failure Pattern (SFP) is present. In this case, the stop would be placed above the high of the SFP trigger candle. A more conservative entry is at the retest of the lower trend line after the price has broken out of the pattern.

The Measured Move or projected initial target would be at the low of the pattern.

Some key features of this pattern include three identifiable drives, with the third drive often breaking above the "channel." Once the price reclaims the original higher trend line, this usually confirms a BAW. Traders should look to aggressively take profits at the Measured Move until they are proficient with the pattern.

These patterns often print with bearish divergence, which can be used as a further confluence for entry.


Dec 20, 2023