Falling Wedge Pattern
Price grinds lower between two downward-sloping trendlines that converge. Typically breaks upward.
Trading rules at a glance
- Entry
- Long on close above the upper falling trendline.
- Stop Loss
- Below the most recent swing low inside the wedge.
- Target
- Starting point of the wedge or measured-move projection.
How the Falling Wedge forms
Lower highs AND lower lows, but the slope of the lows is smaller than the slope of the highs — the trendlines converge downward. Volume declines as the wedge develops.
How to trade it
- Confirm multiple touches on each trendline.
- Wait for a break above the upper trendline.
- Rising volume on the breakout improves reliability.
- Often appears at the end of pullbacks in strong uptrends.
Common mistakes to avoid
- Buying dips mid-wedge.
- Confusing the pattern with a downtrend.
- Expecting the target to be hit in a straight line.
Real-world example
EUR/USD formed a falling wedge between August and November 2020 before breaking higher in a move that carried into early 2021.
Best timeframes
The Falling Wedge works best on 1H, 4H, Daily charts. It can appear on lower timeframes but signal reliability drops significantly below the 1-hour chart.
Related patterns
Head and Shoulders
Three-peak formation that marks the end of an uptrend and the start of a downtrend. One of the most reliable reversal patterns in technical analysis.
Inverse Head and Shoulders
Mirror image of the head and shoulders pattern. Forms at the end of a downtrend and signals a bullish reversal.
Double Top
A resistance level tested twice without breaking, signaling the end of an uptrend. Looks like an "M" on the chart.
Double Bottom
Two troughs at similar support levels followed by a break above the intermediate peak. Looks like a "W" on the chart.