Wedge pattern

Family VI · Charts & indicators

Not to be confused with candlestick pattern, chart pattern, engulfing candlestick pattern.

Wedge pattern is a price formation drawn with two converging trendlines that both slope in the same direction, either upward or downward. It belongs to the family of chart patterns and is interpreted as a period of compression within a larger trend. The pattern resolves when price breaks one of the trendlines, which may indicate continuation or reversal depending on context.

Structure and types

A wedge requires at least two higher highs and two higher lows for a rising wedge, or two lower highs and two lower lows for a falling wedge. The two trendlines converge because the range narrows over time. A rising wedge slopes upward; a falling wedge slopes downward. Volume often declines as the pattern develops, though this is not a formal requirement.

Wedges are commonly classified as continuation or reversal patterns based on their slope relative to the prevailing trend. A rising wedge in an uptrend is often treated as a bearish reversal, while a falling wedge in a downtrend is often treated as a bullish reversal. The same shapes can also appear as continuation patterns in some contexts, so the surrounding trend and breakout direction matter.

Worked example

Consider a stock trading at 100. Over several sessions it makes higher highs and higher lows, but the highs rise more slowly than the lows, compressing the range. The upper trendline connects 108, 110, and 111; the lower trendline connects 102, 104, and 106. The two lines converge near 112.

Rising wedge breakout

Upper trendline at breakout111Resistance

Lower trendline at breakout106Support

Break below lower trendline106Bearish signal

The break below the lower trendline is the event that confirms the pattern. A common measured move targets the height of the wedge's widest part subtracted from the breakout point, but this is a guideline rather than a fixed rule.

Confirmation and caveats

A wedge is not complete until price closes beyond one of its trendlines. Intraday breaks that reverse before the close are less reliable. Traders often wait for a retest of the broken trendline or a volume expansion to confirm the move. Because wedge boundaries are drawn subjectively, different analysts may identify different start and end points on the same chart.

Often confused with

candlestick pattern: A candlestick pattern is formed by one or a few candles and reflects short-term supply and demand, whereas a wedge pattern spans many bars and requires two converging trendlines; the visible sign is the number of candles involved.
chart pattern: A chart pattern is the broad category of geometric price formations, while a wedge pattern is one specific type defined by converging trendlines sloping in the same direction; the visible sign is the presence of two non-parallel, same-direction lines.
engulfing candlestick pattern: An engulfing candlestick pattern is a two-candle reversal signal where one body completely covers the prior body, whereas a wedge pattern is a multi-bar formation with converging trendlines; the visible sign is the single engulfing candle versus a drawn wedge shape.

Wedge pattern

Structure and types

Worked example

Confirmation and caveats

Often confused with

See also