Rising Wedge

A bearish chart pattern where price makes higher highs and higher lows but with converging trendlines, indicating weakening momentum that typically resolves to the downside.

A rising wedge forms when price is trending upward within two converging upward-sloping trendlines — the upper line connecting higher highs and the lower line connecting higher lows, but with the lower trendline rising more steeply so the two lines converge. This compression signals that even as price makes new highs, the advances are getting smaller and sellers are becoming more aggressive near the highs.

Despite its upward appearance, the rising wedge is typically a bearish pattern. It often appears as a corrective rally within a larger downtrend (making it a continuation pattern), or near the end of an uptrend (making it a reversal pattern). The pattern is confirmed when price breaks below the lower trendline. A bearish breakdown often occurs with significant velocity as buyers who had been defending the lower trendline exit simultaneously.

The price target after a rising wedge breakdown is typically the level at the widest part of the wedge (the beginning of the pattern) or the start of the rally that formed the wedge. Volume should ideally contract as the wedge develops and expand on the breakdown, confirming that the move is genuine. A rising wedge that breaks upward instead of downward — invalidating the bearish expectation — is a powerful bullish signal.

The rising wedge is commonly confused with the ascending triangle — a critical mistake, since one is bearish and the other bullish. The distinction lies in the upper trendline. In an ascending triangle, the upper boundary is flat: a fixed horizontal resistance level that buyers are repeatedly hammering. In a rising wedge, the upper trendline also slopes upward, so both lines are rising and converging together. The check is simple: if the ceiling is flat, it's an ascending triangle. If the ceiling slopes upward with the floor, it's a rising wedge — and despite the upward appearance, the expected resolution is down.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.