Technical Glossary / Chart Patterns
Falling Wedge
A narrowing decline: both bounds slope down, and the upper bound is steeper.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A falling wedge slopes down and converges. Lower lows continue, but the range tightens. The classic reading is bullish, selling pressure fading, completed by a break of the upper line. In an uptrend it can act as a bullish pause.
How to identify it
Two down-sloping, converging lines. Lower highs and lower lows, with the highs falling faster. Not a parallel channel.
Bullish reading
A close above the upper line is the long trigger. Risk under the last lower low. The prior downswing inside the wedge is the context, not the signal.
Bearish reading
A break under the lower line means the wedge did not exhaust. The decline is still making a real lower low, not a compressing one.
Common mistakes
Buying the lower line of a falling wedge as if the shape alone were support. The pattern's own rule waits for the upside break.
Limitations
Same subjectivity as the rising wedge. If you cannot place both lines without forcing a touch, it is not a wedge yet.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.