The reversal signaled by the wedge may be either an intermediate reversal within the larger trend or a long-term reversal. However, it is also possible that the trend is contained partially or entirely within the wedge pattern itself. The strongest wedge patterns develop over a three- to six-month period and are preceded by a strong trend that is at least several months long. However, they can occur in the middle of a strong upward movement, in which case the bullish movement at the end of the wedge is a continuation of the overall bullish trend.īoth rising and falling wedges can occur over both intraday and months-long timeframes, although intraday wedges can be difficult to identify with much certainty. They develop when a narrowing trading range has a downward slope, such that subsequent lows and subsequent highs within the wedge are falling as trading progresses.įalling wedges are typically reversal signals that occur at the end of a strong downtrend.
In this case, the bearish movement at the end of the rising wedge is a continuation of the main downward trend.įalling wedges are the inverse of rising wedges and are always considered bullish signals. However, rising wedges can occasionally form in the middle of a strong bearish trend, in which case they are running counter to the main price movement. This means that in contrast to ascending triangles, both subsequent lows and subsequent highs within the wedge pattern will be rising as the trading range narrows towards the apex of the wedge.Īs bearish signals, rising wedges typically form at the end of a strong bullish trend and indicate a coming reversal. Rising wedges are bearish signals that develop when a trading range narrows over time but features a definitive slope upward.
Wedge patterns can be difficult to recognize and trade effectively since they often look much like background trading activity on charts. However, unlike symmetrical triangles, wedge patterns are reversal signals and have a strong bias towards being either bullish – for falling wedges – or bearish – for rising wedges. Wedge patterns are chart patterns similar to symmetrical triangle patterns in that they feature trading that initially takes place over a wide price range and then narrows in range as trading continues.
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