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.

What are wedge patterns?

Wedge patterns are typically reversal patterns that can be either bearish – a rising wedge – or bullish – a falling wedge. These patterns can be extremely difficult to recognize and interpret on a chart since they bear much resemblance to triangle patterns and do not always form cleanly.

What are wedge shaped trend lines?

Wedge shaped trend lines are considered useful indicators of a potential reversal in price action by technical analysts . Wedge patterns are usually characterized by converging trend lines over 10 to 50 trading periods. The patterns may be considered rising or falling wedges depending on their direction.

What are the types of wedges indicating price is in consolidation?

There are 2 types of wedges indicating price is in consolidation. The first is rising wedges where price is contained by 2 ascending trend lines that converge because the lower trend line is steeper than the upper trend line. In other words: the lows are climbing faster than the highs. These wedges tend to break downwards.