What is a falling wedge?

A falling wedge can be defined by a set of lower lows (support) and lower highs (resistance) that slope downwards and contract into a narrower range before price finally breaks above the resistance line and a change in trend direction occurs.

What is a wedge in trading?

What Is a Wedge? A wedge is a price pattern marked by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price series over the course of 10 to 50 periods.

Is a falling wedge bearish?

On a candlestick chart, a falling wedge is a powerful move lower because there are lower highs and lower lows. You might be wondering, is a falling wedge bearish? No! A falling wedge is a very powerful bullish pattern. Below are some common conditions that occur in the market that generate a falling wedge pattern.

Why do technical analysts follow a falling wedge pattern?

The falling wedge pattern is followed by technical analysts because it typically signals a bullish reversal after a downtrend or a trend continuation during an established uptrend.