Rising & Falling Wedges
Overview
Rising and falling wedges are converging trendline patterns where both support and resistance slope in the same direction. A rising wedge (both lines slope upward, converging) is typically bearish, while a falling wedge (both lines slope downward, converging) is typically bullish. Wedges differ from triangles because both trendlines slope in the same direction rather than converging symmetrically.
Key Concepts
Rising wedge: both trendlines slope upward with converging angle, bearish bias. Falling wedge: both trendlines slope downward with converging angle, bullish bias. Diminishing momentum visible through progressively smaller price swings. Volume generally contracts throughout the pattern. At least five touches of the trendlines (three on one, two on the other) for validity.
Entry Signals
Enter on a confirmed break below the rising wedge support or above the falling wedge resistance with volume expansion. Wait for a retest of the broken trendline for a safer entry point. Look for bearish divergence on RSI within a rising wedge, or bullish divergence within a falling wedge. Confirm with a candle close outside the pattern, not just an intraday wick.
Exit Signals
Measured-move target equals the widest point of the wedge projected from the breakout. Place stops on the opposite side of the wedge's last swing point. Partial exits at 1:1 risk-reward with the remainder trailing toward the full target. Invalidation occurs if price re-enters the wedge after breaking out.
Best Timeframes
1H, 4H, Daily
Pro Tips
Rising wedges are especially powerful after extended uptrends because they represent weakening buying pressure despite higher prices. Falling wedges found at market bottoms can produce explosive rallies. Always wait for a confirmed close outside the wedge rather than trading the initial wick break.
More Topics in This Category
Ascending & Descending Triangles
Ascending triangles form when price creates a horizontal resistance line at the top and a rising support trendline at the bottom, indicating buyers are becoming more aggressive. Descending triangles feature a horizontal support floor with a declining resistance trendline, suggesting sellers are gaining control. Both patterns are typically continuation patterns that resolve in the direction of the prevailing trend with a measured move target equal to the triangle's height.
Cup & Handle
The cup and handle is a bullish continuation pattern resembling a teacup when viewed from the side. The cup forms as a rounded bottom with the left and right rims at approximately the same level, followed by a small downward-drifting consolidation (the handle). A breakout above the handle's resistance triggers the measured move, calculated from the bottom of the cup to the rim.
Double Top & Double Bottom
Double tops and double bottoms are two-touch reversal patterns that form when price tests the same level twice and fails to break through. A double top signals bearish reversal after an uptrend, while a double bottom signals bullish reversal after a downtrend. The pattern is confirmed when price breaks the support or resistance level formed between the two peaks or troughs.
Diamond Patterns
Diamond patterns are relatively rare reversal formations that combine a broadening pattern followed by a symmetrical triangle, creating a diamond-shaped outline on the chart. They typically appear at market tops (diamond top) or, less commonly, at bottoms (diamond bottom). The pattern signals an exhaustion of trend momentum as volatility first expands then contracts before a decisive breakout.