Wedge Patterns
Learn rising and falling wedge patterns for trend reversals and continuations.
What Are Wedge Patterns?
Wedge patterns are formed when price action consolidates between two converging trendlines. They can signal both reversals and continuations depending on the trend context.
>Key Characteristic
"Converging trendlines with at least 5 touch points."
Rising Wedge
A rising wedge forms when price makes higher highs and higher lows, but the highs are converging faster than the lows. This shows weakening buying pressure.
In Uptrend
Major Reversal Signal (Bearish)
In Downtrend
Bearish Continuation
Falling Wedge
A falling wedge forms when price makes lower highs and lower lows, but the lows are converging faster than the highs. This shows weakening selling pressure.
In Downtrend
Major Reversal Signal (Bullish)
In Uptrend
Bullish Continuation
How to Trade Wedges
Draw Trendlines
Connect at least 2 highs and 2 lows
Wait for Breakout
Price must close outside the wedge
Confirm Volume
Volume should increase on breakout
Set Target
Target = Widest part of wedge
Confirmation Tips
- • Look for decreasing volume during pattern formation
- • Check RSI for divergence signals
- • Higher timeframes give stronger signals
Common Mistakes
- • Trading before breakout confirmation
- • Confusing wedges with channels
- • Ignoring the broader trend context
>Trading Wisdom
"Wedges show exhaustion. Trade the resolution, not the consolidation."