What is a Wedge Pattern?

Wedge Pattern Definition. A Wedge Chart Pattern is a familiar technical chart formation that depicts a narrowing price range over time. Wedges are generally viewed as a reversal pattern in that the currency price will reverse itself once the pattern is confirmed. Wedges can either be Ascending (or Rising) or Descending (or Falling). Price highs in an ascending wedge are incrementally less, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically result in a downside breakout, and descending wedges typically terminate with upside breakouts. However, the reversal tendency often ties back to the prevailing trend formation. If the prevailing trend was upward and the wedge is descending, then a continuation will most likely happen. In other words, if the wedge direction is opposite to the prevailing trend, a continuation is in order, and if in alignment, then a reversal is to be expected. The widest portion of the wedge typically determines the size of the breakout.

Wedge Pattern

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