#Falling wedge bullish how to#

This is a great example where conservative traders would not have had an opportunity to enter if they waited for a retest of the breakout level. My final chart shows the same falling wedge in Gold that led to a trend continuation when it ended. This occurrence does not necessarily always happen but is another confirmation signal to look out for since the MACD-Histogram also showed a wedge-like formation. Note that the example above also shows a decline in the MACD-Histogram’s peaks before the patter ends. Once this pattern ends there will usually be an increase in momentum once price breaks above the resistance line.

Traders Tip: When you are following a falling wedge in real-time, it can be a good idea to watch for momentum divergence on a MACD-Histogram between the lower lows, and use it as an additional confirmation method that a falling wedge might be nearing an end. The ideal place to set a target will be at the upper level where the falling wedge started from, with a stop loss a few pips below the final low before the breakout occurred.

Just keep in mind though, that a retest of the breakout level might not always happen and result in a trader missing an entry. Conservative traders, on the other hand, will generally wait for price to retest the upper resistance line from above before they will execute a long trade.

#Falling wedge bullish how to#

Practice This Strategy How to Trade the Falling Wedge Patternīecause the falling wedge is a bullish chart pattern, aggressive traders will typically wait for price to break above the upper resistance line before they will execute a long position.