Wedge pattern
Also known as: rising wedge, falling wedge
A wedge pattern forms when a 's price moves between two converging that both slope in the same direction, narrowing the over time in a way that often signals an approaching reversal. Unlike a , where the two boundary lines typically slope toward each other from opposite directions or one is flat, a wedge is distinguished by both lines tilting the same way, either both rising or both falling.
A rising wedge slopes upward, with both the upper resistance line and the lower support line climbing, but the resistance line rising more slowly than support, causing the range to narrow as the pattern develops. Despite forming during what looks like an , a rising wedge is generally considered a bearish pattern, since the narrowing range shows upward momentum is fading even as price grinds higher, and it typically resolves with a breakdown below the lower . A falling wedge slopes downward, with both declining but the support line falling more slowly than resistance. Despite forming during a , it is generally considered a bullish pattern, since it shows selling pressure is losing steam, and it typically resolves with a breakout above the upper .
As with other chart patterns built on converging , volume tends to contract as a wedge narrows and then expands on the eventual breakout, which traders use as confirmation that the pattern has actually resolved rather than just paused. Because a wedge can appear either as a continuation pattern within a larger trend or as a reversal at the end of one, traders generally pay close attention to where the pattern forms relative to the broader trend before deciding which outcome is more likely.