What is a Wedge Pattern?
A wedge pattern is two trendlines sloping the same direction that squeeze price into a tighter and tighter range before it breaks out. Both lines point up — or both point down. And the swings keep getting smaller as price runs out of room.
Think of it like a coiled spring. Buyers and sellers keep accepting tighter prices, pressure builds, then price snaps out one side.
What Does a Wedge Pattern Indicate?
A wedge tells you momentum is dying. The trend is still pushing in one direction, but with less force every swing.
In a rising wedge, buyers keep printing higher highs — but barely. The buying waves get smaller. Pressure shifts to the downside.
In a falling wedge, sellers keep pushing lower — but they're losing steam. The selling waves shrink. Pressure shifts up.
Is the Wedge Pattern Bullish or Bearish?
Rising wedge = bearish. Falling wedge = bullish. The slope tells you which side is running out of fuel.
Counterintuitive at first. A rising wedge LOOKS bullish because price is going up — but it breaks down more often than not. Same logic flipped for falling wedges: they look weak, but the sellers are quietly losing the fight.
How to Identify a Wedge Pattern?
Two same-direction trendlines that converge, with price respecting both boundaries through multiple touches. That's the whole thing.
Here's your checklist:
Both boundaries slope up (rising) or both slope down (falling)
At least two swing touches on the upper line, two on the lower line
Swings clearly compress toward an apex
One boundary is steeper than the other — that's what creates the squeeze
If you're forcing the lines to fit the chart, it's not a wedge. Move on to the next setup.
How to Draw a Wedge Pattern?
Anchor each trendline to obvious swing points, then extend both lines forward until they meet.
Mark the swing highs that define the upper boundary, then connect them with a trendline
Mark the swing lows that define the lower boundary, then connect them with a trendline
Adjust so each line touches wicks or bodies consistently across the swings — don't cherry-pick
Extend both lines forward to see where the range runs out of room
🔥 Pro Tip: If you're connecting wicks on one swing and bodies on the next, you're forcing it. Pick one method per line and stay consistent. A wedge that needs creative drawing isn't a wedge.
How to Trade a Wedge Pattern?
Wait for a candle to CLOSE outside the wedge boundary in the expected direction. Then enter on the breakout — or on the retest of the broken line.
Rising wedge: wait for a close below the lower line, then short the breakout or the retest from below
Falling wedge: wait for a close above the upper line, then buy the breakout or the retest from above
Confirmation trigger: a candle close on your timeframe beyond the line — not a wick poke through it
Skip the trade if price drifts through the boundary without a decisive close
The retest entry usually gives you a tighter stop and better R. The breakout entry catches more moves but eats more false breaks. Pick one approach, journal both, let your data tell you which fits your edge.
What is the Profit Target for a Wedge Pattern?
Project the wedge's height from the breakout point in the direction of the break. That's your measured move.
Height = highest swing high minus lowest swing low inside the wedge
Project that distance from the breakout close
Example: A falling wedge ranges from $120 (top) down to $100 (bottom). Height = $20. If price breaks out at $112, your measured-move target is $132.
📌 Key Takeaway: The measured move is a target, not a guarantee. Take partials at structure, trail your stop, or scale out as price moves in your favor — but don't move the goalpost mid-trade because you "feel" more upside.
Where to Put a Stop Loss on a Wedge Pattern?
Beyond the most recent swing point on the wrong side of the breakout — or beyond the opposite wedge boundary if that's cleaner.
Rising wedge short: stop above the last swing high inside the wedge (or above the upper wedge line)
Falling wedge long: stop below the last swing low inside the wedge (or below the lower wedge line)
Place the stop where a move back into the structure proves the breakout failed — not where normal noise can knock you out
⚠️ Warning: The biggest mistake new traders make here is tucking the stop too tight inside the structure. You'll get chopped out on the first wick, then watch the move go without you. Give it room to breathe. If the risk is too big for your account, the trade isn't for you — size down or skip it.
What Happens After a Wedge Pattern?
Three things can happen after a wedge breaks out: clean acceleration, a retest of the broken line, or a failure back into the wedge.
Clean breakout: strong follow-through candles move away from the line with minimal overlap
Retest: price returns to the broken boundary, rejects it, then resumes the breakout direction
Failure: price closes back inside the wedge and trades toward the opposite boundary
Failures happen more often than newer traders expect. That's exactly why the close-confirmation rule matters — and why your stop placement is more important than the entry itself. The traders who survive wedge fakeouts are the ones who let price prove the move before committing full size.
What are the Different Types of Wedge Patterns?
Two types: rising wedge and falling wedge. The slope of both lines defines which one you're looking at.
Rising wedge: both lines slope upward and converge — typically breaks down
Falling wedge: both lines slope downward and converge — typically breaks up
Don't confuse these with triangles. Triangles have one flat boundary or two lines sloping in opposite directions. Wedges always have both lines sloping the same way — that's the whole tell.