The two wedges are usually seen as bullish and. A rising wedge, on the other hand, is a bullish chart that happens when the fluctuates between two upward sloping and converging trend lines. The confirmation move is when the price breaks out of the last high touching the top line. A falling wedge is simply defined as a continuation pattern that is formed when a price fluctuates between two downward sloping and converging trendlines. To identify an exit, set the target price as the top of the formation (the highest high). Consider buying a security or a call option at the breakout point. In essence, both continuation and reversal scenarios are inherently bullish. As outlined earlier, falling wedges can be both a reversal and continuation pattern.

If the price breaks out from the top pattern boundary, day traders and swing traders should trade with an UP trend. The falling wedge pattern is a technical formation that signals the end of the consolidation phase that facilitated a pull back lower. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). A falling wedge pattern signals a bullish reversal and appears in a downtrend.The price of a falling wedge pattern breaks out in either direction before the two. Written by: Al Hill Rising and falling wedges are a technical chart pattern used to predict trend continuations and trend reversals. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control.

Unlike Descending Triangle patterns, however, both lines need to have a distinct downward slope, with the top line having a steeper decline. The two pattern lines intersect to form a narrow triangle. The Falling Wedge pattern forms when the price of a security appears to be spiraling downward, and two down-sloping lines are created with the price hitting lower lows (1, 3, 5) and lower highs (2, 4).

Falling bullish wedge