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
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.
Broadening & Expanding Patterns
Broadening patterns, also called megaphone or expanding patterns, form when price creates progressively higher highs and lower lows, diverging rather than converging. These patterns reflect increasing volatility and disagreement between buyers and sellers, often appearing during periods of uncertainty or at major market turning points. Broadening patterns are among the most challenging formations to trade because they lack the contracting structure of typical chart patterns.
Pennants
Pennants are short-term continuation patterns that form after a strong directional move. They resemble small symmetrical triangles, with converging trendlines creating a compact consolidation zone. Unlike flags, which have parallel channels, pennants converge to a point. The breakout typically occurs in the same direction as the preceding move, with the measured target based on the flagpole.
Bull & Bear Flags
Bull and bear flags are continuation patterns consisting of a sharp price move (the flagpole) followed by a brief, counter-trend consolidation channel (the flag). Bull flags slope downward after an upward pole; bear flags slope upward after a downward pole. These patterns represent a pause in strong momentum before the trend resumes, and they are among the most commonly traded continuation setups.