Bearish Wedge Pattern
Rising Wedge
This usually occurs when a security’s price has been rising over time, but it can also occur in the midst of a downward trend as well.
The trend lines drawn above and below the price chart pattern can converge to help a trader or analyst anticipate a breakout reversal. While price can be out of either trend line , wedge patterns have a tendency to break in the opposite direction from the trend lines .
Therefore, rising wedge patterns indicate the more likely potential of falling prices after a breakout of the lower trend line . Traders can make bearish trades after the breakout by selling the security short or using derivatives such as futures or options, depending on the security being charted. These trades would seek to profit on the potential that prices will fall.