Wedge Patterns – Wedge Chart Patterns

Wedge patterns in stocks are similar to triangle patterns in that they are marked by narrowing price ranges and converging trend lines.  Wedge patterns can act as both continuation and reversal patterns.  Wedges are known to have a noticeable upward or downward tilt.

There are two primary wedge patterns, the falling wedge pattern and the rising wedge pattern.

Falling Wedge – Falling Wedge Pattern

Falling wedge patterns can be found in both uptrends and downtrends, but taking notice of the prevailing trend will help you determine whether the falling wedge signals a continuation pattern or a reversal pattern.  In both cases, falling wedge patterns are generally resolved to the upside.

Context:  Found within a downtrend, the falling wedge is often a reversal pattern.  When found within the context of an uptrend, the falling wedge is similar to a bull pennant and is a continuation pattern.  The example shown on this page is a falling wedge reversal pattern found at the end of a downtrend.

Appearance:  The falling wedge pattern is a contracting trading range with a downward tilt.  This may be seen by drawing two trend lines, a steeper trend line connecting minor highs, and a shallow trend line connecting minor lows.  The early portion of the wedge has a wider price range, while the latter stages of a falling wedge are characterized by tighter price action.  Volume expansion which accompanies a breakout from a falling wedge adds to the reliability of this chart pattern.

Breakout Expectation:  In the case of a continuation falling wedge, the widest portion of the wedge may be measured and added to the breakout level to determine the upside move which follows.  When a falling wedge is a reversal pattern, the widest portion of the wedge may be added to the breakout level to determine the upside move which follows.



This stock formed a falling wedge pattern during its downtrend which led to an upside reversal and a very reliable trading low.  Once the upper trend line was broken to the upside, the stock moved higher with ease.

Rising Wedge – Rising Wedge Pattern

Rising wedge patterns are bearish and are found at the ends of uptrends as well as during downtrends.  In either case, a downside break from a rising wedge pattern is a technical sell signal or short sell signal.  The rising wedge pattern is a reliable short sell indication.

Context:  When found within a downtrend, the rising wedge is a continuation pattern with similar characteristics of a bear flag pattern.  When found within the context of an uptrend, the rising wedge is an indication that an uptrend may soon reverse course with downside price action to follow.

Appearance:  The rising wedge pattern is a contracting trading range with an upward tilt.  This may be seen by drawing two rising trend lines, one steeper trend line connecting minor lows, and a shallower trend line connecting minor highs.  The early portion of the wedge has a wider price range, while the latter stages of a rising wedge are characterized by tighter price action.  Volume expansion which accompanies a breakdown from a rising wedge pattern adds reliability when trading this pattern.

Breakout Expectation:  A breakdown from a rising wedge pattern should be accompanied by volume expansion as rising support is broken and selling accelerates.  Stronger volume and a higher intensity that accompanies the selling makes this pattern more reliable.



This stock formed a pair of rising wedge patterns during its downtrend.  Each rising wedge led to further downside, with the sell signal or the short sell signal being the downside break of the lower rising trend line.