![]() To limit potential loss when price suddenly goes in the wrong direction, consider placing a stop order to sell at or below the breakout price. The confirmation move is when the price breaks out of the last high touching the top line. Stop loss orders should be placed above the rising wedge and below the falling wedges. A falling wedge is a bullish signal when the trend lines converge at a lower point, while a rising wedge is a bearish signal when the trend lines converge at a higher point. The pattern can signal either bullish or bearish price reversals depending on the direction of the trend lines and the volume. The Falling Wedge chart pattern is a dual pattern. Furthermore, do not confuse a Falling Wedge pattern with a symmetrical triangle, which has little to no up or down slope. Its shape is a cone with a pronounced downward slope, which is its distinguishing feature. ![]() We should enter the market with the break through the signal line of the wedge. A wedge is a price pattern marked by converging trend lines on a price chart. A Falling Wedge is one of the figures (patterns) that signal a bullish reversal. Wedges could be trend confirming or trend reversing depending on the previous price movement. ![]() To identify an exit, set the target price as the top of the formation (the highest high). Falling wedge patterns usually imply an impending increase in price. Consider buying a security or a call option at the breakout point. If the price breaks out from the top pattern boundary, day traders and swing traders should trade with an UP trend. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). Lets Learn About bearish rising wedge A bearish rising wedge is a chart pattern that often appears in the stock market and is seen as a bearish signal. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. Unlike Descending Triangle patterns, however, both lines need to have a distinct downward slope, with the top line having a steeper decline. What is the Falling Wedge Pattern The falling wedge pattern is a bullish trend reversal chart pattern that signals the end of the previous trend and the beginning of an upward trend. ![]() The two pattern lines intersect to form a narrow triangle. The Falling Wedge pattern forms when the price of a security appears to be spiraling downward, and two down-sloping lines are created with the price hitting lower lows (1, 3, 5) and lower highs (2, 4). ![]()
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