A wedge pattern is formed by two sloping but converging trend lines, in which the degree of slope is greater in one trend line than the other.
There are two types of wedges:
- Rising wedge
- Falling wedge
The wedge patterns are indicative of an imminent change in trend, which is usually in the direction opposite that of the wedge itself. Hence, the falling wedge is a bullish reversal pattern while the rising wedge is a bearish reversal pattern.