#Falling wedge how to

As you can see, the falling wedge pattern is formed at the end of the downtrend with three lower highs and two lower lows, and most importantly, a price consolidation at the end of the downward trend.Īs soon as the price breaks above the resistance trend line, an entry point is signaled and the trader will take a long buying position. Then, you need to identify two lower highs and two (or three) lower lows.įor example, let’s take a look at the USD/JPY 30-min chart. To identify a falling wedge pattern, the first thing you need to find is a price consolidation after a downward trend.

#Falling wedge how to

How to Identify and Use the Falling Wedge Pattern? When the falling wedge breakout indeed occurs, there’s a buying opportunity and a sign of a potential trend reversal. Traders often interpret the pattern as a slowing momentum indicator and a price consolidation mode.

Regardless, the falling wedge pattern, much like the rising wedge pattern, is a useful chart pattern that occurs frequently in any financial instrument and in any timeframe. In the vast majority of cases, the pattern appears after a downtrend and is considered a trend reversal pattern, however, in some cases, it can also be found within a trend and can be interpreted as a continuation 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.

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How to identify and use the falling wedge pattern?.