How the pattern forms?
✍The falling wedge is a bullish pattern that begins with wide channel and ends in small range.
✍In falling wedge the formation of lower highs and lower bottoms is downtrend but the breakout above the previous high and resistance level reverses the trend.
✍The channel formation in the falling wedge is wide at the beginning and goes on narrow at the end.
✍The formation of every pattern is depending upon tops and bottoms of price. The channel forming in the falling wedge is bullish in nature but confirms after the breakout.
✍The reliability of this pattern depends upon the number of times the support and resistance has tested. The pattern is more reliable when the support and resistance is tested many times.
How to trade the falling wedge?
✍This pattern is traded in the buy or long side after the breakout above channel and closing above the previous high with the good volume.
✍While trading any price pattern one should wait for conformation in the pattern.
✍The previous lows should be taken as a stoploss for this pattern. The target should be considered at next resistance level or highs in it.
✍As per the above image the pattern has tested support or resistance many times before the breakout.
✍This pattern also indicates the end of downtrend and start of bull phase.
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