Many traders prefer that the volume is decreasing as the pattern forms and the market goes further and further into the wedge. Some traders choose to interpret this as a bullish sign.
Still, if the support line, which is the lower one, falls with a less steep angle than the upper line, it shows us that the bearish forces are falling short on the low. The original definition of the pattern dictates that the slope of both lines should preferably be sloping with the same angle. In other words, market volatility decreases significantly. This means that the distance the market can move gets smaller and smaller the further it moves into the wedge. Both these lines should be sloping downwards, and converge. When the wedge starts to form you should be able to draw a line that connects the local highs, and another one that connects the local lows. The image below breaks down the pattern to make it easier to get an overview of all the criteria you need to consider.
As its name suggests, it resembles a wedge where both lines are falling. The definition of the pattern isn’t that hard to remember. Like we just mentioned, the falling wedge is a bullish price pattern that usually signals the end of the on-going bearish trend, or the continuation of the bearish market mode, depending on the prevailing trend direction. With all this to cover, let’s begin! Definition and Meaning of Falling Wedges One common approach used by many traders to trade the falling wedge.The meaning and definition of the falling wedge.
We’re going to cover all the following things: In this guide we’re going to look closer at the falling wedge trading pattern, and what you need to know in order to start trading it.
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