In the previous educational post, i posted about Rising Wedge patterns and in this post i have explained about Falling Wedge Patterns. (Falling Wedge is opposite of Rising Wedge pattern; for every chart patterns there are opposite patterns excluding some.)
Falling Wedges are Bullish Patterns and it generates bullish signal, Falling wedge patterns forms with Lower highs and Lower lows.
Falling Wedge pattern basically forms in two shapes same as Rising Wedge ; If Falling wedge pattern forms in an uptrend it will make continuation and if Falling wedge pattern forms in a downtrend it will make reversal.
The Lower highs and the lower lows along makes a trend resistance and trend support. When breakout occurs upside, price breaks the trend resistance line.
In Falling wedge breakout occurs upside 60 to 70% of the time.
To confirm a true breakout, we can take help of Volume and other indicators. In a true breakout there will be big volume than usual.
We should use other indicators like MACD and RSI also to confirm that it will turn bullish before taking entry in a trade. (We can see MACD convergence, RSI convergence)
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