A break above the resistance level signals the opening of a long position.

Confirmation of divergence between price and an oscillator such as the RSI or the stochastic indicator.Both lines are directed downwards and converge. Identify trend lines linking lower highs and lower lows.The Falling Wedge as a continuation (or reversal) pattern is easy to spot with these steps: A Falling Wedge is a continuation pattern if it appears in an uptrend and a reversal pattern in a downtrend. It is essential to distinguish between the market conditions in which the pattern is formed.Ī significant differentiating factor determining the nature of the pattern (continuation or reversal) is the direction of the trend when a Falling Wedge appears. The Falling Wedge is interpreted as both a bullish continuation pattern and a bullish reversal pattern, leading to confusion in identifying and defining the pattern. The number of anchor points (tops and bottoms) is essential - if there are less than five, the pattern is unreliable. Draw one line through the significant peaks and another along the significant depressions. The top line (having a steeper downward slope) is the resistance level, and the bottom line is the support level.īuilding a Falling Wedge is a piece of cake. This downward, undulating price movement is limited by two trend lines that intersect at a low point. The Falling Wedge model is a kind of downward price spiral. However, it is worth noting that such setbacks are often short-term. The Falling Wedge chart pattern is a dual pattern that, in some situations, can mean a continuation of a bearish trend and, in some cases, a bullish reversal. Furthermore, do not confuse a Falling Wedge pattern with a symmetrical triangle, which has little to no up or down slope. Its shape is a cone with a pronounced downward slope, which is its distinguishing feature. Falling Wedge DefinitionĪ Falling Wedge is one of the figures (patterns) that signal a bullish reversal. This article describes a technical analysis approach to trading the Falling Wedge and explains the key points when trading this pattern. The Falling Wedge pattern is a valuable trader’s tool that signals an approaching bullish momentum. But even today, graphic patterns do not lose their relevance. These predictable price patterns were invented in the early days of technical analysis. Graphic patterns are part of such a classic. Forex is no exception, which also has its classics of technical analysis. We can view beautiful Renaissance paintings for hours and read the magnificent poetry of the Silver Age many times.

Falling wedges pattern