Rising wedge

What it is

A rising wedge forms when price makes higher highs and higher lows, but the two trendlines converge: the lower line rises faster than the upper line. Each advance covers less ground than the last. It is generally read as bearish, and it completes when price closes below the lower line.

Why it forms

On the surface the trend is up. Underneath, each rally attracts fewer new buyers and stalls sooner, while dip-buyers keep stepping in higher. The market is being held up by a narrowing band of demand. Fading volume often confirms the lack of fresh interest.

When the lower line finally breaks, the buyers who were supporting each dip are caught, and the structure unwinds.

How to identify it

• Both trendlines slope upward.
• The lines converge — the upper line is flatter than the lower line.
• At least two touches on each line.
• Volume often declining as the wedge develops.

What confirms it

A candle close below the lower (support) line, ideally with volume increasing.

What invalidates it

• A close above the upper line with follow-through — momentum has returned.
• The lines diverge instead of converging; the shape is no longer a wedge.

Common mistakes

• Confusing it with a rising channel. In a channel the lines are parallel; in a wedge they converge.
• Acting before the break. A rising wedge can keep rising for a long time.
• Ignoring the timeframe. Small wedges on low timeframes carry little weight.
• Treating the wedge start as a target. It is a reference level, not a forecast.