This can be seen in shrinking prices within the two trend lines. It is formed when the price of the security makes higher highs and higher lows in comparison to the previous price movements in the given time period. Both the scenarios have been discussed at length below: Rising Wedge in Downtrend:Ĭontinuation of the existing trend: When a rising wedge pattern is spotted in a downtrend on a chart, it signifies the continuation of the previous trend. The picture posted below shows all the aspects of a rising wedge pattern:ĭepending on the location of the rising wedge pattern on a chart, it can signify two things. A breakdown of price from the lower trend line.With the decline in prices, volumes traded show a decline in numbers.The presence of two converging trend lines.Although a wedge can result in price breakout from either of the trend lines but usually, the price break out is in the opposite direction from the trend line.Ī rising wedge pattern can be recognized by 3 things: This can result in the security price breaking down the lower trend line. Before the lines converge, sellers start coming in the market and as a result of this, the increase in prices starts to lose momentum. In this article, let us discuss the rising wedge pattern in particular.Ī rising wedge pattern is formed by the two converging trend lines when the price of a security has been rising over a certain time period. These wedge lines can indicate two types of trend reversals – bullish and bearish. These two lines or trend lines show a rise or fall in stock prices and give the appearance of a wedge. A wedge is a shape formed by two converging trend lines on a technical price chart.Īll the highs and lows over a 10 to 50 trading periods are joined by two lines in a price series. In order to understand the rising wedge pattern, let us first try to understand the meaning of a wedge. In this article, we will talk about how we can identify trading opportunities using a rising wedge pattern and make use of them in order to make profitable trades. Generally, this pattern is observed when the price of a security has been increasing over a period of time but sometimes, one can observe this pattern even in times when the prices of the security are showing a downtrend. The other name of this pattern is the ascending wedge pattern. A rising wedge pattern signals a bearish reversal in prices of the securities. Rising Wedge Pattern is one of the tools used by traders who use technical analysis of stocks to initiate positions in stock and currency markets.

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