A wedge connects successive reaction highs and lows with two nonparallel trendlines. In Rising Wedge both rise, usually with the lower line rising faster; in Falling Wedge both decline, with the upper line falling faster. Contraction alone does not say whether the pattern reverses or continues the preceding trend.
Rising Wedge narrows amid higher highs and higher lows and StockCharts gives it a bearish interpretation. Falling Wedge has lower highs and lower lows and a bullish interpretation. Unlike Symmetrical Triangle, both boundaries slope in the same direction. Either reading remains conditional on a breakout, not on the drawing alone. [1] [2]
Upper resistance connects at least two higher reaction highs, and lower support at least two higher reaction lows. The lower line rises faster, leaving less room for another advance. StockCharts treats a convincing support break as bearish confirmation; before it, the sequence of higher prices continues and a reversal is unproven. [1]
Upper resistance connects lower reaction highs and lower support connects lower reaction lows, with at least two of each. The upper line falls faster than the lower, so new lows become relatively shallower. According to StockCharts, the bullish reading is confirmed only by a convincing break above upper resistance, ideally with expanding volume. [2]
Rising Wedge after an advance may reverse downward; within a larger downtrend it may merely pause before a further decline. Falling Wedge after a decline may reverse upward; within a larger uptrend it may pause before a further advance. Without specifying the prior trend and Timeframe, it is misleading to label the shape automatically as a reversal. [1] [2]
Each line needs at least two reaction extremes; a third adds confidence to the drawing. A different choice of swings or scale can change the slope and the breakout time. A pivot drawn retrospectively may only have been recognized after later candles; a rule test must use the time when the information was actually available. [1] [2] [3]
For Rising Wedge, StockCharts describes waning volume during the advance and a possible expansion on the support break. For Falling Wedge, it considers rising volume on the resistance break important to signal conviction. A Close beyond the line, a break of the last reaction extreme or a minimum distance can be defined as extra filters in advance; merely touching the line is insufficient. [1] [2]
StockCharts explicitly gives no measuring technique to estimate the decline from Rising Wedge. The wedge's height therefore cannot automatically become a guaranteed target. Entry, invalidation, exit, Slippage and fees belong in a separate plan; even a completed breakout does not prove profit. [1] [4]
Before Backtesting, fix the rule for choosing pivots, the prior trend, boundaries, breakout, volume and any Close requirement. TradingView warns about confirmed pivots plotted into the past and Lookahead Bias. Include failed patterns, liquidity, costs and out-of-sample data; an attractive sketch is not a tested strategy. [3] [4]
A falling wedge narrows, while its target remains undefined
For the clearest picture, read this entry together with Triangle Pattern, Trendline, Breakout, False Breakout, Backtesting.
01Is every Rising Wedge automatically a downward reversal?+
No. After an advance it may be a reversal; in a downtrend it may be a continuation pause. The bearish reading also requires a support break; the drawing alone does not confirm one.
02Can I calculate a certain price target from the wedge's height?+
No. StockCharts provides no universal measuring technique for Rising Wedge. Even with a confirmed break, target and risk must be set separately, and no calculation guarantees the future price.