Pure Pattern

Just like the rising wedge , the falling wedge can either be a reversal or continuation signal.

As a reversal signal, it is formed at a bottom of a downtrend, indicating that an uptrend would come next.

As a continuation signal, it is formed during an uptrend, implying that the upward price action would resume. Unlike the rising wedge , the falling wedge is a bullish chart pattern.

In this example, the falling wedge may be predicted as a reversal signal after breaking resistance zone . After a downtrend, the price made lower highs and lower lows.

Notice how the falling trend line connecting the highs is steeper than the trend line connecting the lows.