Oliver Kell refers to the Wedge Pop as The Money Pattern.
The Wedge Pop is confirmation that the stock has bottomed and the uptrend has begun.
The chart will begin to display accumulation volume as the price reclaims the moving averages. Once the market or a stock has bottomed, the price action will change character and begin following the Cycle Of Price Action.
As price volatility contracts, the stock will find resistance near the tightening moving averages. A new uptrend begins when the stock trades through the price range, reclaims the moving averages and exhibits increased accumulation volume.
Remember to apply the Cycle Of Price Action to the indexes and individual stocks. When an index displays a Wedge Pop, the leading stocks may be setting up a more traditional longer-term base.
Reversal Confirmation
A stock’s low will always be unknown until after the fact. We don’t know that a stock has bottomed until we can confirm that a new uptrend has begun.
Remember, the bottoming process will be unique to the individual stock’s character and the market environment. The Reversal Extension exhibits capitulation with volatile price action, and then the price snaps back up into the moving averages. However, sometimes, we see more of a rounded bottom as volume decreases.
We will unlikely see a sustainable bottom until a stock rallies to test the moving averages and has a few days to retreat. This contraction in volatility creates a more actionable area.
Putting It Together
The Wedge Pop is a tradable confirmation that the market or stock has bottomed and will begin a new uptrend as it follows the Cycle Of Price.
Wait for volatility to contract after finding a low.
Buy a stock as it breaks through a pivot that forms against the moving averages.
Let the Cycle Of Price unfold, allowing the moving averages to guide the stock higher.
Be on the lookout for volume spikes and gaps. The accumulation volume and strong price action confirm the momentum.
Recognize the Wedge Pop on the general stock index and buy the leading stocks further along in their Cycle Of Price as they break out of bases.