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Falling Wedge Chart Pattern

Falling Wedge Chart Pattern

The Falling Wedge pattern is a bullish chart formation that often signals a potential reversal or continuation of an uptrend. It appears when the price is moving within a narrowing downward-sloping channel. Both the resistance (upper) trendline and the support (lower) trendline slope downward, but the support line falls at a slower pace than the resistance line, causing the wedge to contract.

Key Characteristics of a Falling Wedge

Trend Direction:

  • Forms after a downtrend (reversal wedge) or within an uptrend (continuation wedge).

Slope of Trendlines:

  • Both upper and lower lines slope downward.
  • The upper resistance line declines faster than the support line.

Volume Behavior:

  • Volume usually decreases during the formation as price consolidates.
  • A breakout is often accompanied by a surge in volume.

Breakout Direction:

  • Typically breaks upward, signaling the start or continuation of a bullish move.




How Traders Use It

  • Entry Point: When the price breaks above the resistance line with higher volume.
  • Stop-Loss: Just below the most recent swing low inside the wedge.
  • Target: The expected price target is often measured by the height of the back of the wedge added to the breakout point.

Example :- CDSL daily timeframe chart

CDSL stock was forming a Falling Wedge pattern, and the RSI was trending upward, indicating bullish divergence. The breakout from the wedge, supported by rising RSI and an increase in volume, confirmed the trend reversal

Example 2 - Ola Electric stock daily chart


Example 3 - Netweb stock hourly chart


On the hourly chart, a falling wedge was forming, and when the breakout happened above the trendline, the increase in volume confirmed the pattern





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