If volume remains the same or increases during the wedge formation then the signal will be less reliable. Volume usually diminishes as the pattern develops & this becomes one of the best keys to determine when the pattern may break & it represents the bullishness of the formation. Traders should be prepared to adjust the trendlines as needed with additional swings. The shape of the Falling Wedge is altered by the slope or angle of the descending resistance line which should be steeper than the tighter angle slope of the lower descending support line.įalling Wedges vary in their duration, but will have at least two swing highs and two swing lows in price. By definition this means the Falling Wedge pattern outlines an immediate downtrend pattern in prices with both the immediate support & resistance trendlines slanted in the opposite direction of the larger bullish trend. Visually Falling Wedges are characterized by a contracting range in prices with ‘converging’ or inclining toward each other trendlines that create lower lows & lower highs. Regardless of environment the contracting, narrowing price range outlined by the Falling Wedge is an indication that the immediate downtrend outlined by the wedge is losing strength and considered to have a definite bullish bias. Typically a Falling Wedge is presented as either a bullish trend continuation pattern or a reversal pattern depending on the trading environment in the background.

The Falling Wedge as a price pattern is fairly common and presents in all markets, time frames, & price ranges.

Falling wedge