Web Trader MT5
A wedge is a chart pattern in technical analysis where price moves inside two trendlines that gradually come closer together. It shows that the market is consolidating and that pressure is building before a possible breakout.
There are two common types. A falling wedge slopes downward and is often seen as a bullish signal when price breaks above resistance. A rising wedge slopes upward and is often seen as a bearish signal when price breaks below support.
Example:
If a stock keeps making higher highs and higher lows, but the distance between them becomes smaller, it may form a rising wedge. If the price then breaks below the lower trendline, traders may see this as a sign that upward momentum is weakening and a move lower could follow.
Traders usually wait for confirmation, such as a clear breakout, stronger volume, or support from indicators like RSI or MACD. A wedge does not guarantee direction, so risk management is essential.
