A chart pattern formed by two converging trendlines that slope in the same direction, with price making progressively higher highs and higher lows (rising wedge) or lower highs and lower lows (falling wedge). Rising wedges are generally bearish, indicating weakening momentum in an uptrend, while falling wedges are generally bullish, suggesting that selling pressure is diminishing. Breakouts from wedge patterns are typically sharp as the compression of volatility within the pattern releases stored energy.
Example
“The falling wedge that had been forming for six weeks broke to the upside with a 4% gap, confirming the bullish pattern and targeting a measured move back to $180.”