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Falling Wedge

The Falling Wedge has two downward sloping trendlines. Despite falling prices within the wedge, this is a bullish reversal pattern.

2 falling linesFalling Wedge: Falling convergence → Break top → Rise

Pattern Details

Category

reversal

Success Rate

81%

Average Move

+18%

Duration

2-4 weeks

Pattern Structure

Pattern Structure
Key components that define this chart pattern
  • 1
    Upper Trendline: Slopes downward
  • 2
    Lower Trendline: Slopes downward (steeper)
  • 3
    Volume decreases during formation

Trading Rules

Trading Rules
Essential rules for trading this pattern successfully
  • ✓
    Enter long when price breaks above upper trendline
  • ✓
    Volume should increase on breakout
  • ✓
    Target = Height of wedge at widest point
  • ✓
    Stop loss placed below lower trendline
Trading Tips
  • Falling wedge in downtrend = Bullish reversal
  • Falling wedge in uptrend = Bullish continuation
  • One of the most reliable patterns

Statistics

Breakout Statistics
Bullish Breakout81%
Bearish Breakout19%
Performance Metrics
Average Rise+18%
Average Decline-5%
Pullback Rate8%