Wedge Patterns: Rising and Falling Wedges

Wedge patterns are formed when price moves between two converging trendlines that both slope in the same direction. Unlike triangles (where trendlines converge from opposite directions), wedges have both lines sloping up or down. They’re reliable reversal patterns that experienced traders look for at trend extremes.

Rising Wedge (Usually Bearish)

Both trendlines slope upward, but the lower trendline rises faster than the upper one. Price is making higher highs and higher lows, but the range is narrowing. This suggests that while buyers are still pushing price up, their enthusiasm is fading. Momentum is slowing.

• In an uptrend: Reversal signal — the uptrend is losing steam
• In a downtrend: Continuation signal — a bear flag variant
• Entry: Short when price breaks below the lower trendline
• Stop: Above the wedge’s last high
• Target: Height of the wedge at its widest point projected downward

Falling Wedge (Usually Bullish)

Both trendlines slope downward, but the upper trendline falls faster. Price is making lower lows and lower highs, but the range is narrowing. Selling pressure is weakening.

• In a downtrend: Reversal signal — the downtrend is exhausting
• In an uptrend: Continuation signal — a pullback within the larger uptrend
• Entry: Buy when price breaks above the upper trendline
• Stop: Below the wedge’s last low
• Target: Height of the wedge projected upward

Wedge vs Triangle

Trading Tips

• Wedges are more reliable on higher timeframes (daily and above)
• Volume should decline during the wedge and spike on breakout
• The more touches each trendline has, the more significant the pattern
• Wedges can take weeks or months to form — be patient
• Rising wedges have a slightly higher success rate than falling wedges