Rising and Falling Wedges Explained

23. Sept. 2023

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Today, we'll explore two important ones: the Rising Wedge and the Falling Wedge. These patterns can signal shifts in market trends. Let's dive in and see how they work.

Rising Wedge:

In an uptrend, the Rising Wedge hints at a bearish turn. It takes shape as prices find a middle ground between two upward-sloping lines, one as support and the other as resistance, both inching closer. As the price inches towards the wedge's tip, its upward push tends to fade, suggesting a potential shift to a downward trend.

Your sell signal triggers with a bearish break beneath the wedge's support.
Set a stop loss just above the wedge's highs.
Aim for the next significant support level.

Falling Wedge:

Unlike the Rising Wedge, the falling wedge spells optimism in a downtrend. It emerges as prices consolidate between two downward-sloping lines, one providing support and the other resistance, both drawing nearer. As prices approach the wedge's apex, the downward momentum loses steam, hinting at a potential shift towards an upward trend.

Your buy signal activates with a bullish breakout beyond the wedge's resistance.
Place a stop loss just below the wedge's lows.
Target the next notable resistance.

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