There are two types of wedges, a rising wedge, which contrary to its name is a bearish pattern, and a falling wedge which is a bullish pattern.
A wedge is a pattern in which price movements are limited within two converging trendlines until the occurrence of a breakout (whether upside or downside would depend on the type of wedge).
In a rising wedge, both trendlines slant up but since both are converging trendlines, the lower trendline is placed at a steeper slant than the upper trendline.
In the case of a falling wedge, the exact opposite of a rising wedge occurs. As far as a rising wedge is concerned, there is no clear demarcation of a supply level to be overcome but there is a slow disenchantment of investor interest.
Though there is a rise in price every fresh rise is weaker than the last rise and ultimately a complete lack of demand leads to a trend reversal. This is a typical rising wedge formation. A falling wedge would be exactly opposite to the aforesaid pattern but with a clear downward tilt.
A downward slant in a falling wedge or an upward slant in a rising wedge is a must falling which there could be confusion as well as overlapping with right-angled triangles.
A wedge, either rising or falling, needs slightly more than three weeks to complete. Prices remain within the confines of a rising wedge pattern for two-thirds of a distance from the entrance to the apex.
Once there is a downward breakout from a rising wedge, the fall is swift and rapid and hardly any time is wasted in its journey down. The decline in normal circumstances retraces all the ground covered within the wedge.
Activity in a wedge - whether rising or falling - gradually decreases as the price moves towards the apex of the wedge. Normally wedges don
