Quick Summary – Rising Wedge Pattern in Forex (Bearish Reversal Signal)

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⚡ Quick Summary – Rising Wedge Pattern in Forex (Bearish Reversal Signal)

The Rising Wedge Pattern in Forex trading is a powerful bearish reversal signal often spotted in Japanese candlestick charts. It shows higher highs and higher lows forming within a tightening range — revealing weakening buying momentum. When price breaks below support, traders anticipate a downward move. Learn how to identify, confirm, and trade this pattern effectively.

Rising Wedge Pattern (Japanese Candlesticks)

Understand the Rising Wedge pattern, a common formation signaling bearish reversals in Forex candlestick charts. Learn its structure, market psychology, and how to trade it confidently.

📘 What Is a Rising Wedge?

A Rising Wedge is a bearish chart pattern that appears during an uptrend or consolidation phase. It’s characterized by converging trendlines: both rising, but the support line is steeper than the resistance line. This pattern indicates weakening buying pressure and often precedes a downtrend reversal.

🧩 Structure and Price Behavior

  • Resistance line: connects higher highs with a mild slope.
  • Support line: connects higher lows with a steeper slope.
  • Volume: typically decreases as the pattern matures.
  • Breakdown: occurs when price closes below the support line.
Support (steeper) Resistance (shallow) Breakdown Rising Wedge: narrowing uptrend and bearish reversal setup

🛠 How to Trade the Rising Wedge

  • ✅ Entry: After a confirmed breakdown below the lower support line.
  • 🎯 Target: The projected move equals the wedge’s height measured at its widest part.
  • 🛑 Stop-loss: Above the last swing high inside the wedge.

🔎 Confirmation Signals

  • Volume: Should rise during the breakdown.
  • Candle patterns: Look for Bearish Engulfing or Shooting Star near resistance.
  • RSI: Bearish divergence (price makes higher highs, RSI makes lower highs).
  • MACD: Crosses below zero confirming bearish momentum.

⚠️ Common Trading Mistakes

  • Entering early before confirmation of breakdown.
  • Ignoring volume and momentum indicators.
  • Setting unrealistic profit targets or skipping stop-loss.

💡 Key Takeaways

  • The Rising Wedge is a bearish reversal pattern formed during weak uptrends.
  • Wait for a confirmed breakdown below support before entering a short position.
  • Target equals the wedge’s height; place stops above the last swing high.
  • Combine with RSI, MACD, and volume to confirm bearish pressure.
  • Avoid early entries — patience and confirmation ensure higher accuracy.

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