Technical Analysis
Falling Wedge
A bullish pattern where price declines within a narrowing wedge — both trendlines slope down but the upper falls faster, signalling exhaustion of sellers.
Key rules
- Both trendlines slope downward; upper falls faster than lower
- Volume contracts as the wedge narrows
- Bullish signal — buys trigger above the upper trendline
- Breakout retest of the upper trendline as support is common
- Target is typically the starting high of the wedge
A falling wedge is a bullish pattern that forms when price moves lower in a converging channel. Both trendlines slope downward, but the upper trendline falls faster than the lower, narrowing the range.
Despite the downward drift, this pattern signals that selling pressure is weakening. Lower lows are being made but with diminishing momentum. A breakout above the upper trendline is a bullish signal.
**Context** - As a continuation pattern: forms during an uptrend pullback - As a reversal pattern: forms at the bottom of a downtrend
**Breakout** A close above the upper falling trendline confirms the pattern. The initial breakout is often retested before the full move materialises.
**Target** Measured move is typically back to the widest point of the wedge (the leftmost high).