Falling Wedge

A Falling Wedge looks like a continued decline, with both the highs and lows printing lower values, but those values converge as the wedge narrows. The pattern is bullish — it signals that selling pressure is waning and a reversal is imminent. Indian swing traders use falling wedges to time long entries after deep corrections or within counter-trend declines.

Visual identification

• At least two lower highs and two lower lows.
• Highs fall faster than lows, narrowing the wedge.
• Volume diminishes as the pattern progresses.
• Bullish momentum divergence (RSI, MACD) often appears.

Why it is bullish despite the down-slope

Sellers are progressively less aggressive — each leg lower goes a shorter distance. Buyers absorb supply at higher prices each time. When the pattern resolves with a breakout above the descending resistance, the move can be powerful.

Confirmation and entry

Wait for a close above the descending resistance line. A retest of the broken resistance as new support offers a higher-probability long entry. Place stops just below the most recent low inside the wedge.

Target projection

Measure the maximum height of the wedge (from the highest high to the corresponding low). Add this height to the breakout price for the minimum upside target. Many wedges produce moves that far exceed the measured target.

Where falling wedges typically form

• Corrective phases within larger uptrends.
• End of bear markets — major reversals on weekly charts.
• Mid-cap and small-cap stocks coming out of deep corrections.
• Indices after sharp single-event sell-offs (e.g., Covid March 2020 bottom).

Things to watch for

Falling wedges that form within strong downtrends without a clear bullish divergence are less reliable. Combine with RSI bullish divergence or rising OBV for higher conviction. Manage risk by exiting if the wedge breaks downward — failed bullish patterns can deliver sharp continuation declines.

Frequently asked questions