Clients must consider all relevant risk factors, including their own personal financial situation, before trading. Trading stocks, options, futures and forex involves speculation, and the risk of loss can be substantial. Past performance of a security or strategy is no guarantee of future results or investing success. Market volatility, volume and system availability may delay account access and trade executions.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union. The wedge width can also be a performance factor: wider wedges seem to be more reliable than the narrow ones.ĭo Not Sell or Share My Personal Information Nonetheless, the results for the non-classical combination of Falling Wedge in downtrend with a downward breakout seems to work surprisingly better than all other wedge combinations as one can expect, they are rare to find. The estimated performance of the Falling Wedge is a bit higher than that of the rising one, but still questionable. Gaps before the breakout are also said to improve the performance.

During the pattern formation, volume is most likely to fall however, better performance is expected in wedges with high volume at the breakout point. In this case, price within the Falling Wedge is usually not expected to fall below the panic value, ending up in breaking through the upper trendline. Thus, the Falling Wedge is generally regarded as a bullish pattern.įalling Wedges often come after a climax trough (sometimes called a 'panic'), a sudden reversal of an uptrend, often on heavy volume. Downward breakouts are much less expected: one study shows that virtually all breakouts happen to the upside and another study states that at least two thirds do. When following an uptrend, the Falling Wedge pattern shows gradual decline in price which, in most cases, will end up breaking through the upper line, thus continuing the preceding trend. Statistically, the latter are less often to occur but seem more striking than consolidation.

It takes at least five reversals (two for one trendline and three for the other) to form a good Falling Wedge pattern.īoth Rising and Falling wedges show great versatility: they could appear as consolidation patterns with the trend, or against the trend, or even as topping patterns after a climax. The Falling Wedge pattern is the opposite of the Rising Wedge: it is defined by two trendlines drawn through peaks and bottoms, both headed downward.

Falling wedges pattern