Education: Descending Wedge Pattern

Continue breaking down another key pattern in technical analysis. If an ascending wedge indicates a sharp drop, then a descending wedge is a very strong bullish reversal pattern. It shows that sellers are completely exhausted, and the main force is preparing to turn upward.

What it looks like on the chart (see screenshot):
1. Convergence: Price is squeezed between two downward-sloping lines
2. Inclination angle: The upper line (resistance) declines faster than the lower line (support), and the two lines are clearly converging
3. Accumulation: Inside the pattern, the price moves in a zigzag pattern (points 1, 2, 3, 4 on the chart are very clear). Each new low becomes harder to reach, and the downward momentum is weakening

What is the logic?
Market panic, seeing a downward trend, continues to greedily short at the bottom. But we need to understand the mechanism: large funds are just placing limit orders, buying the panic sell-offs at low prices. Market makers use these retail investors' sell-offs to accumulate their huge long positions. Once the selling side's chips are exhausted, the price will break through the resistance level, soaring in a chain reaction of short liquidations.

How to operate:
- Entry: Do not try to bottom fish inside the wedge! Wait until the upper resistance boundary is clearly broken before going long. Ideally, wait for a solid bullish candle to close above the line, or enter on a retest after the breakout
- Stop loss: Safely place below the last local low (point 4 on the chart), protecting funds from being wiped out by last-minute manipulative suppression
- Take profit: Measure the widest part of the wedge when it first forms (the bottom), project this distance upward from the breakout point, and that will be our final take profit target (the red Target mark on the chart)

Core rule:
The pattern is only truly complete once the upper resistance line is broken. Before that, the price may continue to decline for a long time. Stay patient, and wait for a clear structural signal before entering!

Save this core knowledge point, trade rationally! $BTC