Wedge Pattern: A Key to Trend Reversals and Continuations📈 Wedge Pattern: A Key to Trend Reversals and Continuations
A wedge pattern is a technical chart formation that signals a potential reversal or continuation in the market. It’s formed when price moves between two converging trendlines — either sloping upward or downward — creating a narrowing range over time.
There are two main types of wedge patterns:
🔻 Falling Wedge (Bullish)
Formed during a downtrend or as a correction in an uptrend.
Characterized by lower highs and lower lows, with the slope of the support line steeper than the resistance line.
Typically signals a bullish reversal as momentum builds for a breakout to the upside.
✅ Confirmation: Break above the resistance line with volume surge.
🔺 Rising Wedge (Bearish)
Appears during an uptrend or as a correction in a downtrend.
Shows higher highs and higher lows, but the support line is steeper than the resistance line.
Often leads to a bearish reversal, especially when volume declines into the pattern.
⚠️ Confirmation: Break below the support line with increasing volume.
🧠 Key Characteristics
Volume tends to decrease as the pattern forms, indicating a pause in momentum.
The breakout direction (up or down) determines whether it’s a continuation or reversal signal.
Wedges can appear on any time frame and are useful for both day traders and long-term investors.
📊 Trading Tip
Always wait for confirmation of the breakout before entering a trade. False breakouts can be common, especially in low-volume environments
