Rising Wedge
Definition
Converging upward trendlines — typically bearish.
Rising Wedge is a technical chart pattern characterized by two converging, upward-sloping trendlines. The lower trendline is drawn along the increasing lows, while the upper trendline connects the decreasing highs. This pattern is typically bearish, indicating a potential reversal in the market.
Rising wedges matter because they signal a possible trend change. After the price breaks out of the wedge, typically to the downside, it may continue in that direction, making it a useful pattern for traders looking to enter short positions. For example, if a currency pair like EUR/USD forms a rising wedge, a break below the lower trendline could indicate a potential sell opportunity.