What all these things come together, you have a falling wedge pattern, and a breakout to the upside should be anticipated. It has three common characteristics that traders should look for: it has converging trend lines, declining volume as the trend line progress, and finally, it will be preceded by a breakout through the upper trend line. The falling wedge indicates a bullish reversal pattern in price. Once the trend lines converge, this is where the price breaks through the trend line and spikes to the upside. Traders can look to the beginning of the descending wedge pattern and measure the peak to trough distance between support and resistance to spot the pattern.Īs the price continues to slide and lose momentum, buyers begin to step in and slow the rate of decline. When a stock or index price move has fallen over time, it can create a wedge pattern as the chart begins to converge on the way down. What does the Falling Wedge pattern tell traders?
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