4/18/2024 0 Comments What is a falling wedge patternTo identify a good falling wedge pattern, look for two downward-sloping trendlines that form a wedge shape. How to Identify a Good Falling Wedge Pattern? The pattern ranked 31st out of 39 chart patterns for upward breakouts and 27th out of 36 chart patterns for downward breakouts. Performance-wise, when compared to other chart patterns, the failure rate is a bit high except for downward breakouts in a bear market. He analyzed daily data on US equities and identified over 1,400 trades based on the breakout of the falling wedge pattern. Thomas Bulkowski is known for conducting one of the most comprehensive publicly available studies on chart patterns. On the other hand, reversals tend to outperform continuations. Usually, upward breakouts in falling wedge patterns indicate a reversal in the price trend, while downward breakouts favor a continuation of the trend. Is the Falling Wedge Pattern a Continuation or Reversal Pattern?įalling wedge can signal either a reversal or a continuation of the price trend, with both scenarios occurring almost equally often. You can notice that the downward moves are getting shorter and shorter on the image above this indicates that bullish move is forming. While rising wedge often leads to bearish moves, falling wedge often leads to bullish moves. This means that falling wedge pattern also usually leads to breakouts. The falling wedge pattern is basically the opposite of the rising wedge pattern. Falling wedge patterns are characterized by a series of lower lows and lower highs that converge to form a wedge shape.
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