The ALSI 40 big wedge formation offers a great trade opportunity
The wedge pattern is a very distinct pattern that traders’ use world-wide.
Basically, in the chart above, you can see the ALSI 40 was moving in a sideways channel. That sideways channel has a resistance line (ceiling) and a support line (floor). And from May 2016 to the beginning of January 2017, it was moving between these two levels.
This distinct movement between the levels, over a number of months, tells me this formation is a wedge pattern.
Until the second week of January 2017 came.
We saw the price of the ALSI 40 pierce right through the resistance line.
Clearly, momentum was stronger on the upside.
This tells you that there was high demand for the ALSI40. And going back to Economics 101, when there’s higher demand, you can expect the price to rocket.
Why I expect the ALSI 40 to rocket 2,964 points from here
Here’s another rule of thumb with the wedge pattern.
Once, the price breaks out of the wedge pattern above the resistance, the target will be for the price to reach the top of the wedge formation.
Which in this case for the ALSI 40 is at 48,597.
This is exactly 2,964 points or a 6.49% move from its current level (45,633).
And if you play your cards right, and you use a derivative like the ALMI CFD, you can bank a 64.9% gain.
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“Wisdom yields Wealth”
Head of trading, FSPInvest.co.za
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