The Wedge: Converging Boundaries With a Slope
A wedge has converging boundaries that both slope the same way. That is what separates it from a triangle: both lines point up, or both point down.
Wedge, triangle and channel
A triangle's boundaries converge toward each other; a channel's run parallel; a wedge's converge while both point the same way. The distinction matters: converging boundaries sloped in one direction mean the move is continuing but with fading amplitude. A channel shows no such fade.
Why fading amplitude outweighs direction
In a rising wedge price rises, but each successive push is shorter than the last while pullbacks prevent a fall. Externally it looks like continued strength; in substance it is exhaustion. That is why a rising wedge is read as bearish and a falling one as bullish: the interpretation runs against the visible direction.
Entry and stop
Entry on a break of the boundary opposite to the slope: downward for a rising wedge, upward for a falling one. Stop behind the last extreme inside the figure. The target is usually the height of the wedge at its widest, but here it is especially provisional: wedges often resolve into a range rather than a sharp impulse.
How not to fool yourself
A wedge is easy to draw where none exists — two lines through convenient points will do it. The check is simple: each boundary should touch at least two noticeable extremes, and they must be genuine turning points rather than incidental wiggles. And a wedge needs context: the same shape in the middle of a sideways market means nothing.
We deliberately publish no measurement for this figure. Its marking cannot be formalised unambiguously, and any detection algorithm would reflect our arbitrary thresholds rather than a property of the market. Where the definition is strict — as with the inside bar or engulfing — we test the pattern on data and publish the result. Here it is more honest to say there is nothing to test.
This material is educational and is not individual investment advice. Trading forex carries the risk of losing capital.
Frequently asked questions
Is a rising wedge bullish or bearish?
Bearish. Price rises but the amplitude of each push fades, which is read as buyers running out. A falling wedge is read as the mirror image, as bullish.
How does a wedge differ from a triangle?
By the slope of the boundaries. A triangle's converge toward each other; a wedge's both slope the same way. That is why a wedge is interpreted against its visible direction while a triangle is treated as neutral compression.
How many touches make a wedge valid?
At least two noticeable extremes on each side. Two lines drawn through arbitrary points produce a figure on any chart — which is how most wedges are 'found'.
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