Look for the two converging, downward-sloping trendlines with at least two touches on each. Volume should ideally decrease as the pattern develops.
Pine Script®
Wait for Breakout:
A bullish signal occurs when the price breaks above the upper trendline.
Pine Script®
Confirm Breakout:
Confirm the breakout with an increase in trading volume.
Pine Script®
Manage Risk:
Set a stop-loss order below the lower trendline and a take-profit target by projecting the wedge's widest point upward from the breakout.
Reliability
The falling wedge is considered a reliable bullish pattern with a reported success rate of 74% in bull markets. Its reliability is strengthened by increasing volume upon breakout.
