What is Falling Wedge chart pattern?
Rising and falling wedges are a technical chart pattern used to predict trend continuations and trend reversals. The falling wedge is a generally bullish pattern signalling that one will likely see the price break upwards through the wedge and move into an uptrend.
How does it work?
The falling wedge is a bullish stock pattern that begins wide at the top and contracts as prices move lower. It occurs when the price is making lower highs and lower lows which form two contracting lines. The falling wedge usually precedes a reversal to the upside, and this means that you can look for potential buying opportunities.
How to Trade with Symmetrical Falling wedge pattern?
· To qualify as a reversal pattern, there must be a prior trend to reverse. Ideally, the falling wedge will form after an extended downtrend and mark the final low.
· It takes at least two reaction highs to form the upper resistance line. Each reaction high should be lower than each previous high.
- Wait and watch for a candlestick to breakout of the Falling wedge pattern.
- Volume decreases during the formation of the wedge and should expand on the breakout.