Rising Wedge

A rising wedge is a chart pattern where both the highs and the lows are rising, but the lows are rising FASTER than the highs. The result is a narrowing upward-sloping channel that tightens toward an apex. Despite the upward slope, this is a BEARISH pattern. The narrowing range signals that buyers are losing momentum even while pushing higher, and the eventual break is usually to the downside. The pattern works because the structure reveals weakness disguised as strength. Buyers are paying up, but each successive high is smaller than the last. That's the hallmark of an exhausted trend. When the lower trendline finally breaks, the trapped longs cut their positions and the move down can be fast. Measured target: the widest part of the wedge projected DOWN from the breakdown. Often the move retraces the entire wedge formation.