With descending wedges, the upper and lower trendlines are drawn by connecting the lower highs and lower lows to form the familiar wedge shape. Both the upper resistance and lower support lines also converge as price moves lower in a narrowing range. The descending wedge pattern, also known as a falling wedge, typically appears at the end of a bearish market before a strong bullish breakout occurs. Here also, the trendlines started to converge as price moved higher within a narrowing range towards the end of the pattern.īoth of the above ascending wedge pattern examples formed prior to strong bearish reversals, which is why traders will seek to make a profit on the assumption that prices will fall when this pattern ends. The next chart example shows an ascending wedge pattern that formed during a downtrend. The narrowing range toward the end of this bull run signalled that the upward momentum was decreasing and that a strong reversal might occur at any moment. To draw the upper resistance and lower support lines, technical analysts will connect the higher highs and higher lows with trendlines to see whether price is contracting within a narrowing range as price moves higher. The chart example above shows two converging trendlines (orange lines) that were drawn above and below the price structure of a market during the final phases of an uptrend, revealing what an ascending wedge pattern looks like. Learn more about wedge patterns like the falling wedge pattern.The ascending wedge, also known as a rising wedge, can be seen as a bearish reversal pattern that can either form after a market has been trending higher over time or during a corrective phase in a downtrend. Rising wedge patterns offer reliable signals for short selling, so we highlight them within downtrends for members of our stock pick service. Each rising wedge led to further downside, with the sell signal or the short sell signal being the downside break of the lower rising trend line. This stock formed a pair of rising wedge patterns during its downtrend. Stronger volume and a higher intensity that accompanies the selling makes this pattern more reliable. Volume expansion which accompanies a breakdown from a rising wedge pattern adds reliability when trading this pattern.īreakout Expectation: A breakdown from a rising wedge pattern should be accompanied by volume expansion as rising support is broken and selling accelerates.
The early portion of the wedge has a wider price range, while the latter stages of a rising wedge are characterized by tighter price action. This may be seen by drawing two rising trend lines, one steeper trend line connecting minor lows, and a shallower trend line connecting minor highs. When found within the context of an uptrend, the rising wedge is an indication that an uptrend may soon reverse course with downside price action to follow.Īppearance: The rising wedge pattern is a contracting trading range with an upward tilt. The rising wedge pattern is a reliable short sell indication.Ĭontext: When found within a downtrend, the rising wedge is a continuation pattern with similar characteristics of a bear flag pattern.
In either case, a downside break from a rising wedge pattern is a technical sell signal or short sell signal. Rising wedge patterns are bearish and are found at the ends of uptrends as well as during downtrends.
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