Rising Wedge
A pattern in which both lines slope upwards and converge to the right. Price keeps making higher highs and higher lows, but the lower line is steeper than the upper one, so each new high clears the last by less. It is usually read as bearish, and it completes with a close below the lower line.
How it forms
- Prior move. The pattern is most often seen at the end of an uptrend, where it is read as a reversal pattern. It can also form within a downtrend, as an upward correction against the fall. There it is read as a continuation pattern.
- Higher highs. Price makes at least two peaks, each higher than the one before. Joining them gives an upward-sloping upper line.
- Steeper higher lows. Over the same period, price makes at least two troughs, each higher than the one before. The line joining them also slopes upwards and is steeper than the upper line. So the two lines converge to the right.
- Narrowing. Each new high clears the last by a little less, and the swings get smaller. At least four touches in total (two on each line) are needed; five or more make the pattern clearer. Volume often falls during this phase.
- Breakout zone. The break usually comes before the apex where the lines meet, roughly two thirds to three quarters of the way along the wedge. If price drifts all the way into the apex, the pattern starts to lose meaning.
- Completion. The pattern is complete when price closes below the lower line. A wick below the line that closes back above it is not a breakdown.
The thresholds here are approximate values commonly used in textbooks, not strict rules.
What it suggests
Price keeps rising, but each new high clears the last by less. Buyers keep lifting the lows while progress at the highs shrinks. This can suggest the rise is losing strength and buyers are holding price up within an ever narrower range.
At the end of an uptrend, the pattern is read as the trend tiring. Within a downtrend, the rise is seen as just a correction, and a break of the lower line can suggest the fall may resume. Either way, the direction is not settled before the break. If price closes above the upper line, the picture changes.
When it strengthens, when it weakens
Strengthens
- A clear uptrend or downtrend before the pattern
- The upper line rising into a resistance zone
- More than two touches on each line
- Volume falling during the pattern and rising at the break
- The break coming in the last third, before the apex
Weakens
- Lines drawn with few touches, or forced to fit
- Lines with almost the same slope (no real narrowing)
- Price drifting all the way into the apex
- A strong support zone just below the lower line
- False breakdowns, where a wick crosses the line but the close stays above
The MarketLevelMap view
How it relates to zones
The sides of a rising wedge are sloped. So zones mostly matter in terms of where the wedge is climbing into and where the break is heading:
- If the upper line is rising into a resistance zone, price can be seen approaching that zone with ever weaker highs. Sellers in the zone may be meeting the last steps of the rise.
- If a wedge within a downtrend ends just below a former support zone, the rise can be read as a retest of that zone. The zone may now be acting as resistance.
- If a support zone sits just below the break, there is an area where price may react again soon. It is a more realistic reference than the measured move.
After the break, price sometimes returns to retest the lower line from below. Because the line is sloped, the retest point moves up over time. If the broken line is close to the edge of a zone, the retest may also happen inside that zone. If price does not close above the zone on the retest, the break is considered more solid.
When it completes
Close below the lower line.
When it is invalidated
Before completion: If price closes above the upper line before breaking the lower line, the narrowing is broken and the pattern is considered not to have formed. The rise may be gaining pace instead.
After completion: Even after a close below the lower line, if price climbs back into the wedge and closes above the last high, the bearish scenario is considered invalid. False breakdowns like this sometimes lead to sharp moves up.
Often confused with
For general information only. Not investment advice.Last updated: