The wedge chart pattern usually signals a trend reversal. Its pattern is almost similar to symmetrical triangle, and ascending and descending triangle, where support level and resistance level converge to form a triangle. The main difference between these is the steepness of resistance or support level.

Rising wedge

A rising wedge is generally a bearish pattern. It is formed when the two trend lines converges forming a slanted upward direction with the support is steeper the resistance. During the life of the wedge, the price movement should at least test both the resistance and support trend line twice. The pattern is completed when a breakout has occurred – price breaks below the support level. Once it occurred, price is expected to move approximately the same height of the formation.

Falling Wedge

Conversely, a falling wedge is generally a bullish pattern. Again, the pattern is formed when the two trend lines converges forming a slanted downward direction with the resistance steeper than the support. The pattern is completed when a breakout has occurred – price breaks above the resistance level. Once it occurred, price is expected to move approximately the same height of the formation.