The height of the Rising Wedge formation (the difference between the resistance and support line at the beginning of the wave) is 3,685.4. The chart below presents an example of the Rising Wedge pattern in the Dow Jones Industrial Average (^DJI) monthly wave that started on Decemat 21,712.53 and reached 29,568.57 on February 12, 2020, making more than 36% gain in less than fourteen months. This conflict of expectation creates an uncertainty that is not sustainable and usually resolves in the price outbreak.Įxample: Rising Wedge (Ascending Wedge) in Uptrend

In a Rising Wedge formation the support line has a steeper slope than the resistance line, since sellers have more pessimistic view on the direction of the trend. In a Rising Channel pattern, the slope of support and resistance trend lines is the same, since buyers and sellers have the same level of confidence in the trend direction.

The steepness of the Support/Resistance Trend Line indicates the buyers/sellers enthusiasm. The support trend line presents the buyer's sentiments, while the resistance trend line represents the seller's sentiments. Usually the breakout price's change (CD) approximately equals the height of the pattern formation. The height of the formation is the distance between the support and resistance lines at the beginning of the triangle formation (AB). This situation usually generates Divergence on long-term indicators. The Rising Wedge appears in a mature trend characterized by overbought long-term and short-term indicators. As with other triangle formations, the volume usually diminishes as the price rises and then increases during a breakout. In a downtrend, the Rising Wedge is considered as a continuation pattern. A Rising Wedge represents the loss of the upside momentum and has a bearish bias.Ī Rising Wedge (Ascending Wedge) is a bearish pattern that usually marks a reversal in an uptrend. Unlike the Rising Channel formation, where support and resistance lines are parallel, in a Rising Wedge formation the support line is noticeably steeper than the resistance line. The Rising Wedge pattern is valid when the price touched both the support and resistance lines alternatively at least tree times. The resistance trend line connects the formation's tops. The line that connects the bottoms of the formation represents a support trend line.

A Rising Wedge (Ascending Wedge) pattern is a triangle formation with noticeable slant to the upside. The breakpoint is normally located around 65% of the length of the falling wedge.įalling wedges which are bigger give better performance than narrow wedges.A Rising Wedge pattern also known as Ascending Wedge pattern is one of the most reliable, low-risk, and high-reward chart pattern. Pullbacks are detrimental to the performance of the pattern. The downward retracement is normally two times faster than the formation of the wedge. More of the trend lines are sloped, the more the upward movement will be violent. The spacing between each contact point on lines is necessary, it is important otherwise it could be a pennant. – In 27% of cases, false breakout occurs. – In 47% of cases, a pullback will occur on the resistance. – In 63% of cases, the target of the pattern will be reached once the resistance is broken. – In 92% of cases, there will be a downward exit. The target price is presented by the highest point that results in the formation of the wedge.Ĭheck out some statistics about the falling wedge: The movement will have almost no selling power which displays the willingness of a bullish reversal. Volumes will then be at their lowest and eventually decrease as the waves. A second wave is formulated thereafter but prices will decrease lower and lower at the contact with the resistance. Another wave of decrease will then happen, but with lower amplitude, thus displaying the weakness of sellers. The highest will reach during the first correction on the support of the wedge and will form the resistance. A characteristic is by a progressive reduction of the amplitude of the waves. The pattern labels the shortness of sellers. Each of the lines must be touched at least twice for validation. To prove a falling wedge, there has to be oscillation between the two lines. A falling wedge is a bullish reversal pattern made by two converging downward slants.

Falling wedge price target