Falling Wedge Pattern
Learn to recognize and trade a falling wedge pattern through interactive charts.
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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.
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Falling wedge duration
A falling wedge pattern usually forms over 3 to 6 months.
Falling wedge characteristics
In a falling wedge pattern, prices move between downward sloping converging support and resistance lines.
- A falling wedge happens in a downtrend.
- Prices should make lower lows, bounded by a lower support line. They should touch support on at least two occasions, and ideally more.
- Prices should also make lower highs, bounded by an upper resistance line. They should touch resistance 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 suggests that selling pressure is lessening.
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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