A Falling Wedge is a bullish reversal or continuation chart pattern that forms when a security's price makes lower highs and lower lows within a narrowing, downward-sloping channel with both the upper resistance trendline and lower support trendline converging as they descend. Despite the downward slope, the narrowing range signals that selling pressure is gradually diminishing. A breakout above the upper trendline of the wedge ideally accompanied by a surge in volume confirms the pattern and signals a potential significant upward move. When the Falling Wedge appears during a downtrend, it suggests a trend reversal; when it forms during a broader uptrend as a pullback, it indicates trend continuation after the breakout.
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