Rising and falling wedges

Prerequisite: A repeatable multi-timeframe process

On a small screen, scroll the figure sideways or open it full size.

Learning objective

Distinguish a wedge from a parallel channel and test direction-specific hypotheses.

A wedge has two boundaries sloping in the same direction while converging. In a rising wedge, the lower boundary rises faster than the upper; a falling wedge has the opposite geometry. Parallel lines describe a channel, not a wedge. Compare slope and width objectively instead of naming every diagonal consolidation a wedge.

The rising-wedge bearish interpretation and falling-wedge bullish interpretation are common conventions, not certain outcomes. The previous trend determines whether analysts describe a potential reversal or continuation. Require a stated boundary-break rule and record opposite-direction breaks instead of excluding them from the sample.

Compression can leave a narrow apparent stop distance, but normal spread can consume much of it. Measure the current boundary values at the actual decision bar. A measured-height reference and a previous swing area are alternative ways to frame a scenario; neither removes the need to test execution assumptions.

Common mistakes

Do not force convergence by moving anchors after the break. A weak slope difference may be an ordinary channel within measurement error.

Practice

Construct a falling wedge with two falling boundaries and shrinking width. Write two possible break paths, then show a parallel channel using the same starting width.

Sources & further reading

• IG — Ten chart patterns