Definition
Falling Wedge forms when both support and resistance slope downward but converge. Despite the downward price movement, it's typically bullish as selling pressure diminishes. Breakout to the upside often leads to significant gains.
Formula
Price Target = Highest point of wedge or measured move up
Example
Price falls in a narrowing wedge from $50-$45 to $42-$40. Breakout above the upper trendline (around $42) often targets the wedge's starting point ($50) or higher.
FAQ
What is Falling Wedge?
A bullish pattern with converging downward-sloping trendlines.
How do you calculate Falling Wedge?
A common formula for Falling Wedge is: Price Target = Highest point of wedge or measured move up
Why is Falling Wedge important?
Falling Wedge helps investors evaluate chart patterns and make more informed decisions.