Falling Wedge Pattern

Learn to recognize and trade a falling wedge pattern through interactive charts.

What is a falling wedge pattern?

A falling wedge, also known as a bullish wedge, is a reversal pattern that happens in a downtrend. It suggests that the current downtrend could end, even as prices make lower lows.

Download our free chart patterns PDF for a guide to 20 classical chart patterns with over 100 interactive charts, also on TradingView.

Duration

A falling wedge pattern usually forms over 3 to 6 months.

Characteristics

In a falling wedge pattern, prices move between downward sloping converging support and resistance lines.

  1. A falling wedge happens in a downtrend.
  2. Prices should make lower lows, bounded by a lower support line. They should touch support on at least two occasions, and ideally more.
  3. Prices should also make lower highs, bounded by an upper resistance line. They should touch resistance on at least two occasions, and ideally more.
  4. Support and resistance lines converge towards one another, as the distance between highs and lows becomes noticeably tighter. This suggests that selling pressure is lessening.

Trading volumes

A falling wedge pattern has no volume requirements.

Falling wedge trading tips

This pattern is complete once price breakouts convincingly above resistance. The breakout should happen on rising volume, at least 40% above average. Some traders wait for a successful retest before opening a long position. This means waiting for confirmation that resistance now acts as support. For example, you could wait for several daily closes above support to confirm the trend reversal.

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About the author

I'm St├ęphane, a trader and an entrepreneur. My mission with TrustedBrokers is to help you find the right broker for you, whether you're a beginner or a pro. I've personally used and tested the brokers on our service, opening and funding real-money accounts, contacting customer service and placing trades. I started my career in investment banking in London.

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