THE FALLING WEDGE is a bullish pattern that
begins wide at the top and contracts as prices move lower. This price action
forms a cone that slopes down as the
reaction highs and
reaction lows converge.
In contrast to symmetrical triangles,
which have no definitive slope and no bias, falling wedges definitely slope
down and have a bullish bias. However, this bullish bias cannot be realized
until a resistance breakout. We
see a test of that resistance line over the last two days.
The falling wedge can also fit into the
continuation category. As a continuation pattern, the falling wedge will still
slope down, but the slope will be against the prevailing uptrend. As a reversal pattern, the falling wedge slopes down and with
the prevailing trend. Regardless of the type (reversal or
continuation), falling wedges are regarded as bullish
patterns.
There is also a thread on the other
channel.
Andrew
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