Logically, all Falling Wedges, both in an uptrend and a downtrend, are bullish. Keep in mind that regardless which of the upper two scenarios we have in front of us, all Rising Wedges are bearish. It is usually a temporary price movement to the opposite side, a retracement. However, a rising wedge during a downtrend, as illustrated on the next screenshot, often acts as a continuation pattern. Often, such a scenario during an uptrend acts as an early sign of a possible price reversal. One is visualized below.Īs you can see from the picture, the market is forming higher highs and higher lows, but because the lows are being formed faster than the highs, the support line is steeper than the resistance. In our case, a Rising Wedge is a price action zone, bound between upward sloping support and resistance lines. The price forms highs and lows in the same direction, but the pace at which the two types of extremes are formed differs. It gives traders opportunities to take buy positions in the market.In general, a wedge is a market consolidation zone, bound between two sloping support and resistance lines, which would eventually converge. It is formed when the prices are making Lower Highs and Lower Lows compared to the previous price movements. The Falling Wedge in the downtrend indicates a reversal to an uptrend. ![]() It gives traders opportunities to take buy positions or average their position in the market. The Falling Wedge in the Uptrend indicates the continuation of an uptrend. This results in the breaking of the prices from the upper trend line.ĭepending upon the location of the falling wedges indicates whether the trend will continue or reverse: Falling Wedges in Uptrend What is a Falling Wedge Pattern?Ī falling wedge is formed by two converging trend lines when the stock’s prices have been falling for a certain period.īefore the line converges the buyers come into the market and as a result, the decline in prices begins to lose its momentum. It gives traders opportunities to average or take short positions in the market. It is formed when the prices are making Higher Highs and Higher Lows compared to the previous price movements. The Rising Wedge in the downtrend indicates a continuation of the previous trend. It gives traders opportunities to take short positions in the market. The rising wedge in an uptrend indicates a reversal of the downtrend. ![]() This results in the breaking of the prices from the upper or the lower trend lines but usually, the prices break out in the opposite direction from the trend line.ĭepending upon the location of the rising wedges it indicates whether the trend will continue or reverse: Rising Wedges in Uptrend How do you differentiate between a wedge and a triangle chart pattern?Ī rising wedge is formed by two converging trend lines when the stock’s prices have been rising for a certain period.īefore the line converges the sellers come into the market and as a result, the prices lose their momentum. ![]() How to filter Stocks using this Chart Pattern Screener?.Formation of the Rising and Falling Wedge Pattern.
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