Rising and Falling Wedge Patterns: Converging Lines That Slope the Same Way

Two lines slope the same way and converge

A wedge is a shape in which the line connecting the highs and the line connecting the lows slope in the same direction while drawing steadily closer. If both lines slope upward it is called a rising wedge; if both slope downward, a falling wedge. In a rising wedge the lower line (the line of lows) is steeper than the upper line, and in a falling wedge the upper line (the line of highs) is steeper than the lower line. So price moves in one direction, yet the gap between highs and lows keeps shrinking as the pattern goes on.

• Rising wedge: both lines slope up; the lower line is steeper
• Falling wedge: both lines slope down; the upper line is steeper
• Triangle: the lines slope in opposite directions, or one is flat
• Channel: the two lines are parallel, so the width stays the same

How it differs from triangles and channels

Because it narrows, a wedge resembles a triangle. The difference is the direction in which the lines slope. In a symmetrical triangle the line of highs comes down and the line of lows comes up until they meet, and in ascending and descending triangles one line is horizontal. In a wedge both lines slope the same way, so price keeps moving in one direction even while the range narrows. The difference from a channel is the width. The channels covered in the trendlines and channels article have parallel lines that keep the width constant, but a wedge narrows as it goes, so its two lines are bound to meet at some point.

Rising wedge: losing strength on the way up

In a rising wedge both the highs and the lows are rising, but the highs rise by less than the lows. Each new high is only slightly above the last, and pullbacks grow shallower, so the range narrows. Textbooks read this as upward momentum fading, and consider the shape complete when a close breaks below the lower line. For the measured target after the breakdown, two explanations are used side by side: a return to the price zone where the wedge began, and the width of the wedge's opening measured from the breakdown point.

Falling wedge: the declines get smaller

A falling wedge is a rising wedge flipped upside down. Highs and lows both fall, but the lows fall by less than the highs. Each new low is only slightly below the last, which is interpreted as downward momentum fading. Textbooks consider the shape complete when a close breaks above the upper line, and until then still treat it as a downtrend of lower highs and lower lows. Before any breakout, price sometimes breaks below the lower line and keeps falling, so it is hard to take a rebound as a given from the shape alone.

At the end of a trend it is a reversal; in the middle, a continuation

What a wedge is called depends on where it appears. A rising wedge at the end of a long advance is classified as a reversal pattern, one where the trend changes, while a bounce shaped like a rising wedge in the middle of a downtrend is classified as a continuation pattern, one where the decline carries on. Likewise, a falling wedge at the end of a long decline is a reversal, and one that forms as a pullback within an uptrend is a continuation. In every case the breakout direction textbooks treat as typical is the same: down for a rising wedge, up for a falling wedge. What differs is whether that breakout is seen as a change of trend or as a return to the original trend.

• Rising wedge at the end of a long advance: reversal
• Rising wedge as a bounce within a downtrend: continuation
• Falling wedge at the end of a long decline: reversal
• Falling wedge as a pullback within an uptrend: continuation

Identifying the shape depends on how you draw the lines

Whether a chart shows a wedge ultimately comes down to how you draw the lines. Depending on whether you connect wick tips or body ends, and which highs and lows you choose, the same chart can look like a parallel channel, a narrowing wedge or a triangle with one flat side. There is a convention that a line needs at least two touches to count and carries more weight with a third, but people disagree even on what counts as a touch. If you settle a rule for choosing points in advance, the way the Support & Resistance Finder takes a high above the 5 bars on each side as a swing high, you are less likely to pick and connect only the points that suit you. That tool draws horizontal zones, though, so it will not draw sloping wedge lines for you.

The volume story and confirming the breakout

Textbooks treat as typical a wedge in which volume shrinks while it narrows and expands on the bar that breaks out of the lines. But volume falling off as the range narrows is common in ranges and triangles too, so declining volume alone cannot tell you which way a wedge will break. Judging the breakout carries the same problem as with other patterns. Price sometimes pokes out with a wick and then closes back inside the lines, so many people go by the close, and the longer you wait for confirmation, the more of the early part of the move passes by. This is covered in detail in the breakouts and false breakouts article.

Common misconceptions

The most common misconception is to read the label rising wedge as if a decline were already scheduled. Before the breakdown, a rising wedge is still an uptrend of higher highs and higher lows, and sometimes it narrows all the way and then breaks out upward, or fizzles out sideways. Also, when you search backward through a chart whose move has already played out, wedges seem to fit almost every time. The statistics this course measured directly on Binance bars do not include wedges, so it is more accurate to treat knowing the shape's typical interpretation and knowing how often that interpretation is right as two separate questions. When a chart that looks like a wedge comes up in the Chart Prediction Quiz, you can practice by settling on a breakout direction first and then checking it against the hidden bars.