Rising Wedge Pattern
Learn to recognize and trade a rising wedge pattern through interactive charts.
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What is a rising wedge pattern?
A rising wedge, also known as a bearish wedge, is indicative of slowing momentum in an uptrend. It suggests that the current uptrend could end, even as prices make higher highs.
- GBPJPY Rising Wedge forex
- EURUSD Rising Wedge forex
- General Electric (GE) Rising Wedge stocks
- Credit Suisse Group (CS) Rising Wedge stocks
Rising wedge duration
A rising wedge pattern usually forms over 3 to 6 months.
Rising wedge characteristics
In a rising wedge pattern, prices move between upward sloping converging support and resistance lines.
- A Rising Wedge happens in an uptrend.
- Prices should make higher highs, bounded by an upper resistance line. They should touch resistance on at least two occasions, and ideally more.
- Prices should also make higher lows, bounded by a lower support line, also called the pattern’s trendline. They should touch support on at least two occasions, and ideally more.
- Support and resistance lines converge towards one another, as the distance between highs and lows becomes noticeably tighter. This points to rising selling pressure.
Look for falling trading volumes as the pattern builds, as evidence that buying interest is waning.
Rising wedge trading tips
This pattern is complete once price breaks convincingly below the trendline. The breakout need not happen on rising volumes, but an expansion would provide a bearish confirmation. Some traders wait for an unsuccessful retest of the trendline before opening a short position. This means waiting for confirmation that the prior trendline now acts as resistance. For example, you could want to wait for several daily closes below trend to confirm the trend reversal.
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