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A rising wedge is generally a bearish pattern, even though price is sloping upward while it forms. Both the support and resistance lines rise, but they converge, showing that upward momentum is weakening as gains get smaller. It often signals a reversal after an uptrend or a continuation lower during a downtrend. The bias points to a downside break, though it is a probability, so traders wait for confirmation below support.

A rising wedge is formed by two upward-sloping trendlines that converge, with the lower support line rising more steeply than the upper resistance line. On the chart it looks like a narrowing upward channel that tightens toward an apex. The shrinking range reflects buyers pushing price up with progressively less strength. Because momentum is fading, it typically resolves with a breakdown below the lower trendline rather than a continuation higher.

Traders usually wait for price to close decisively below the wedge’s lower support line, then enter short, sometimes on a retest of that broken line. A stop is often placed above a recent swing high or the upper trendline. The measured target is commonly the wedge’s height at its widest point, projected downward from the breakdown. Because false breaks occur, confirmation and stops are important, and trading it as a CFD carries risk.

To identify a rising wedge, look for a series of higher highs and higher lows while both trendlines slope upward and converge, with the lower support line typically rising faster than the upper resistance line. The narrowing price range creates the wedge shape. Ideally, price touches each trendline at least twice. Declining volume can support the pattern by suggesting weakening momentum, while increasing volume on a downside break can add confirmation. The bearish setup is confirmed when price decisively closes below the lower support trendline.

In a rising wedge both trendlines slope upward and converge, and the pattern is usually bearish, pointing to a downside break. An ascending triangle has a flat horizontal resistance line on top with a rising support line below, and it is usually bullish, pointing to an upside break. The key clue is the top line: sloping up means wedge (bearish bias), flat means ascending triangle (bullish bias).

A frequent mistake is assuming the upward slope means the pattern is bullish and buying into it, when the rising wedge usually breaks down. Another is entering before a confirmed close below support and getting caught in a fake move. Traders also misdraw the lines, mistaking a channel or triangle for a wedge. Waiting for a decisive breakdown, ideally with rising volume, and using a stop above the wedge helps avoid these errors.