Wedge pattern

The wedge pattern is a commonly found pattern in the price charts of financially traded assets (stocks, bonds, futures, etc). The pattern is characterized by a contracting range in prices coupled with an upward trend in prices (known as a rising wedge) or a downward trend in prices (known as a falling wedge).

The Falling Wedge

The falling wedge pattern is characterized by a chart pattern which forms when the market makes lower lows and lower highs with a contracting range. When this pattern is found in a downward trend, it is considered a reversal pattern, as the contraction of the range indicates the downtrend is losing steam. When this pattern is found in an uptrend, it is considered a bullish pattern, as the market range becomes narrower into the correction, indicating that the downward trend is losing strength and the resumption of the uptrend is in the making.

The Rising Wedge

The rising wedge pattern is characterized by a chart pattern which forms when the market makes higher highs and higher lows with a contracting range. When this pattern is found in an uptrend, it is considered a reversal pattern, as the contraction of the range indicates that the uptrend is losing strength. When this pattern is found in a downtrend, it is considered a bullish pattern, as the market range becomes narrower into the correction, indicating that the correction is losing strength, and that the resumption of the downtrend is in the making.

See also

• Technical Analysis
• Chart pattern
• Trend lines (technical analysis)

External links

• Falling Wedge Pattern - Free Trading Videos
• The Falling and Rising Wedge Patterns - InformedTrades
• ChartSecret.com: How To Trade Wedge Chart Pattern
• Tales From The Trenches: The Rising Wedge Breakdown
• Chart Examples of Wedge Patterns