Falling Wedge

A falling wedge is the bullish mirror of the rising wedge. Both highs and lows are falling, but the highs are falling SLOWER than the lows. The result is a narrowing downward-sloping channel. Despite the bearish slope, the structure reveals seller exhaustion — each new low is smaller, meaning sellers are running out of conviction. The breakout is usually to the upside. The pattern is one of the most reliable reversal signals when it forms after an extended downtrend. The narrowing range plus diminishing momentum gives buyers a clear entry once the upper trendline breaks. The breakout often comes with a sharp burst because trapped shorts cover their positions. Measured target: the widest part of the wedge projected UP from the breakout. Falling wedges sometimes deliver moves that retrace the entire wedge formation in a few sessions.