Wedge
Chart PatternsA pattern with two converging trendlines that both slope in the same direction. A rising wedge is bearish, and a falling wedge is bullish, as price typically breaks against the wedge's slope.
What Is a Wedge Pattern?
A wedge forms when two converging trendlines both slope in the same direction, either upward (rising wedge) or downward (falling wedge). Unlike a Symmetrical Triangle where the lines slope in opposite directions, wedge lines slope the same way, creating a narrowing pattern that tilts up or down.
Rising Wedge (Bearish)
A rising wedge has both trendlines sloping upward, with the lower line rising more steeply. Price is making higher highs and higher lows, but the range is compressing. This signals weakening buying momentum. On EUR/USD, a rising wedge during an uptrend warns of a reversal. A break below the lower trendline confirms the bearish signal. The target is the widest part of the wedge projected downward.
Falling Wedge (Bullish)
A falling wedge has both trendlines sloping downward, with the upper line falling more steeply. Price makes lower highs and lower lows, but the range narrows. This signals weakening selling pressure. A break above the upper trendline is bullish.
Wedges can serve as both reversal and continuation patterns depending on context. A falling wedge in an uptrend is a bullish continuation. A falling wedge in a downtrend is a bullish reversal. The breakout direction is the same either way.
Related Terms
Symmetrical Triangle
A continuation pattern where converging trendlines connect lower highs and higher lows, creating a narrowing range. It typically breaks in the direction of the prior trend.
Pennant
A small symmetrical triangle that forms after a sharp move (flagpole), representing a brief pause before the trend continues. It looks like a tiny converging triangle on a pole.
Broadening Formation
A chart pattern where price swings widen over time, forming diverging trendlines. It reflects increasing volatility and disagreement between buyers and sellers.