The Wedge Formation

Another variation of The Technical Triangles are wedges. Wedges are more or less the same as triangle formation but the only difference is that there is slight slant either on the upside or downwards. If the slant is on the upside it is considered a bearish wedge while if it is on the downside we consider it to be bullish.

The above figure represents different types of wedges.

1) Falling Wedges- Falling wedges are considered bullish in both downtrend and uptrend. The formation is more or less the same as descending triangle but the only difference is that instead of a constant support line at same level, the support line is also slopping downwards. The pattern is completed once the price breaks above the upper resistance line.

Following are some examples of falling wedges:

2. Rising Wedge Formation- While a falling wedge formation is considered bullish a rising wedge is a bearish one. Let's have a look at it:

A Rising Wedge can occur in both uptrend and downtrend. It too resembles ascending triangle breakout pattern with the difference that the upper resistance line instead of being constant is sloped slightly upwards. The patterns get completed once the price breaks down from the lower support line.

Following are some examples of Rising Wedge Formation:

The figure below will help you further distinguish between falling and rising wedge:

To Summarize:

1) Wedges are variation of triangle breakout patterns.

2) Wedges are of two type i) Rising Wedge ii) Falling Wedge

3) These can occur either in a uptrend or in a downtrend.

4) A Rising Wedge is considered bearish while a Falling Wedge is considered bullish

5) The pattern gets completed after breakout  downwards in case of rising wedge and upwards in case of falling wedge.

6) So, we can go long after breakout in case of a falling wedge and short after breakdown in case of a rising wedge with a stop loss slightly above/below the point of breakout.

That's all in wedge formation friends. Doubts/ Queries if any can be asked in the comments.

Happy Learning
The Stock King

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January 7, 2016 at 8:19 PM delete

Hi Abhi Sir,

For investigating triangle patterns what is the duration of data we have to look at ?

Shashiraj NK