🔻 Wedge Pattern – Reversal & Continuation Signal

The Wedge Pattern is a converging trendline formation that can signal either a reversal or continuation. It appears as price action narrows over time and usually precedes a breakout.

📘 Types of Wedge Patterns

• Rising Wedge: Price rises with converging trendlines; usually bearish reversal.
• Falling Wedge: Price falls with converging trendlines; usually bullish reversal.
• Can appear as continuation patterns in strong trends depending on breakout direction.

💡 Market Psychology

- Rising Wedge: Buyers push price higher but momentum weakens; breakout downward signals reversal. - Falling Wedge: Sellers push price lower but momentum fades; breakout upward signals reversal. - Volume typically decreases during wedge formation and increases on breakout.

✅ Pro Tip: Wait for breakout confirmation with volume to avoid false signals.

⚙️ How to Trade Wedge Patterns

1. Identify converging trendlines forming the wedge.
2. Determine the type: Rising Wedge (bearish) or Falling Wedge (bullish).
3. Wait for price breakout in the expected direction.
4. Enter a position in the breakout direction.
5. Place stop-loss above the wedge for bearish or below the wedge for bullish.
6. Set a target using the height of the wedge projected from breakout point.

🏁 Conclusion

Wedge patterns are versatile formations signaling potential reversals or continuations. Correct identification, breakout confirmation, and monitoring volume are key to trading them successfully.

“Wedges reveal the weakening trend — the breakout shows who takes control next.”