Wedge Pattern
A chart pattern formed by two converging trendlines both sloping in the same direction, typically interpreted as a reversal signal once price breaks against the wedge's slope.
A wedge pattern forms when two trendlines, both sloping in the same direction, converge toward each other as price consolidates. A rising wedge slopes upward and is generally interpreted as a bearish signal, since it reflects progressively weakening upward momentum even as price continues drifting higher; a falling wedge slopes downward and is generally interpreted as a bullish signal, reflecting progressively weakening downward momentum even as price continues drifting lower.
This distinguishes a wedge from a triangle pattern (see Kaavon's "Triangle Pattern" glossary definition), whose trendlines typically slope in different directions or one stays flat — a wedge's defining feature is that both boundaries point the same way. A wedge pattern is generally considered confirmed once price breaks against the direction of the wedge's own slope, which is the opposite directional expectation from how a flag or pennant continuation pattern typically resolves.
Examples
- A rising wedge, where both trendlines slope upward but converge, is generally interpreted as a bearish signal despite price technically still drifting higher within it.
- A wedge pattern is distinguished from a triangle by both of its boundary trendlines sloping in the same direction, rather than converging from opposite directions or with one flat line.