Wedge Pattern — A Key to Trend Movements

📐 Wedge Pattern — A Key to Trend Movements 📈

🔍 Introduction
The Wedge is a chart pattern that represents a phase of directional consolidation following a trending move. It can act as a continuation 🔄 or a reversal 🔃 signal, depending on the context. The structure consists of two converging trendlines, both sloping in the same direction.

🧩 Pattern Description
Unlike the Flag pattern 🚩, the Wedge has no flagpole and doesn’t depend on the direction of the previous move. The direction of the wedge body determines its type:

A falling wedge ⬇️ is bullish 🟢 (buy signal)
A rising wedge ⬆️ is bearish 🔴 (sell signal)
The breakout is the key point to watch. The two trendlines slope in the same direction but at different angles, causing them to converge. This reflects a loss of momentum ⚠️ and typically indicates that buyers or sellers are preparing to take control.

This pattern can act as:

A continuation signal 🧭 — appearing at the end of a correction
A reversal signal 🔄 — forming at the end of a strong trend
📉 Volume is usually low during the wedge and rises on breakout. A low-volume breakout increases the risk of a false breakout ❗. Often, price retests the breakout level 🔁, giving traders a second chance to enter.

🎯 Entry & Stop-Loss Strategy
📥 Entry: On breakout confirmation
🛑 Stop-loss: Below the pattern’s low (bullish) or above its high (bearish), or under/above the most recent local swing point
🎯 Target: Project the height of the widest part of the wedge from the breakout point. Alternatively, use key price levels 📊 or a trailing stop 🔂 to lock in profits.
💡 My Pro Tips for Trading the Wedge
✅ Pattern Criteria

Two converging trendlines ➡️➕➡️
Clearly defined structure ✏️
Prior trending move before the wedge 🚀
Low volume within the wedge 📉, high volume on breakout 📈
Retest of breakout level = confirmation 🔁
🔥 Factors That Strengthen the Signal

Breakout on strong volume 📊💥
Appears after an extended trend 🧭📉📈
More touches = stronger pattern ✍️
Breakout occurs close to the apex 🎯
⚠️ Factors That Weaken the Signal

Low volume on breakout 😐
Poorly defined trendlines 🫥
Few touches on lines
Early breakout (too far from apex) ⏱️
No prior trend / appears in a range-bound market 📏

✅ Examples of My Successful Wedge Trades
📸

https://www.tradingview.com/chart/NATURALGAS/dvw2GKJO-U-S-NATURAL-GAS-BEARISH-WEDGE-WORKED-OUT-WHAT-S-NEXT/

https://www.tradingview.com/chart/XAUUSD/rEpYibOo-WEDGE-IN-XAUUSD-POSSIBLE-OUTCOMES/

https://www.tradingview.com/chart/USOIL/vAah8J9e-BRENT-CRUDE-OIL-FORMED-A-BEARISH-WEDGE-ANOTHER-POSSIBLE-DECLINE/

❌Examples of Failed Wedge Overview
💥
https://www.tradingview.com/chart/XAUUSD/rEpYibOo-WEDGE-IN-XAUUSD-POSSIBLE-OUTCOMES/

https://www.tradingview.com/chart/ETHUSD/QsWjpS0x-ETHUSD-FORMED-A-BEARISH-WEDGE-READY-TO-REVERSE/

💬 Do you use the wedge pattern in your trading?
It’s a powerful pattern, especially when confirmed by volume and market structure. Share your favorite wedge setups or ask questions below 👇👇