Chart Examples of Wedge Patterns

Here's a falling wedge in the very beginning of an uptrend. As you can see, volume dissipates during the formation of the wedge pattern and then picks up on the breakout.

Falling wedge in an uptrend. After more than a $2.00 rally, the market pauses before continuing higher for an impressive run. Volume dips during this pause and then picks up on the breakout and trek higher.

Falling wedge in a downtrend. This pattern was able to reverse the downtrend nicely. Volume drops off in the wedge and then comes back as the market moves out of the pattern.

Falling wedge in downtrend. Nice reversal. After waning volume in the wedge, there's a good increase on the breakout. In fact, these good volume readings were able to sustain themselves during the move higher.

The rising wedge put a stop to this uptrend. Volume tails off as the trend struggles. Volume expands as the market falls through the bottom of the wedge and the new downtrend begins.

This rising wedge stopped corn dead in its tracks! (As you can see, July corn went off the board shortly after the downside breakout, but nevertheless, lost more than 70 cents in just six days - WOW!) As for volume, the story remains the same. Volume falls off in the wedge and jumps on the breakout.

This rising wedge seemingly presented an area of indecision. However, within a few weeks the market resolved itself in the direction of the trend (down.) As usual, volume increases on the breakout after diminishing during the pattern.

Rising wedge in a downtrend. A short pause followed by renewed downside conviction. And once again, volume dries up in the pattern and increases on the breakout. (Notice how the volume really starts to pick up as the downtrend gains momentum shortly after the break.)

RISING WEDGE IN A DOWNTREND (BEARISH) h
Japanese Yen (Nearest Future / March '00)

The Japanese yen, broke out of a rising wedge in a waning uptrend (new downtrend) and continued to move lower and lower. The wedge actually had a small false break, with a return move back into the pattern, but the wedge's upper parameter was never challenged and it quickly plunged through the bottom. Notice how the volume forecasted the down move. The volume increases on the first move off of the highs, then flattens (actually falls a bit) during the formation of the pattern. The volume then spikes up as the market collapses through the wedge.

chartpatterns.com's

The information contained here was gathered from sources deemed reliable, however, no claim is made as to its accuracy or content. This does not contain specific recommendations to buy or sell at particular prices or times, nor should any of the examples presented be deemed as such. There is a risk of loss in trading futures and futures options and you should carefully consider your financial position before making any trades. The reference to statistical probabilities does not pertain to profitability, but rather to the direction of the market. The size and the duration of the markets move, as well as entry and exit prices ultimately determines success or failure in a trade and is in no way represented in these statistics. Furthermore, no representation is being made that any of the examples shown resulted in actual trades. This is not, nor is it intended to be, a complete study of chart patterns or technical analysis and should not be deemed as such.

Futures and options trading carries significant risk and you can lose some, all or even more than your investment.