Wedges are neutral patterns, they can be a reversal or continuation, thus the trend prior to the pattern formation doesn't really matter.
Since the falling wedge a bullish pattern, all touches to the wedge's upper border will be referred to as resistance, and touches to the lower border will be referred to as support.
PRICE ACTION:
• Price action finds first resistance (1), where it reverses direction and goes downwards till finding first support (2).
• Price action reverse direction from support (2) and goes upwards, till finding the second resistance (3) which must be lower than the first resistance (1).
• Price action reverse direction from resistance (3) and goes downwards, till finding the second support (4), which must be lower than the first support (2).
• The pattern is completed when price action reverse direction from (4) and goes upwards till it breaks the wedge's upper border at point (5).
TRADING THE PATTERN
• Trade entry: after breaking the wedge's upper border at point (5), with an entry after confirming the breakout.
• Take profit: identified by measuring the vertical distance from the wedge's highest high (1) to the wedge's lower border, that measurement is then applied from the breakout point (5).
• Stop loss: the wedge's lowest low (4).
Since the falling wedge a bullish pattern, all touches to the wedge's upper border will be referred to as resistance, and touches to the lower border will be referred to as support.
PRICE ACTION:
• Price action finds first resistance (1), where it reverses direction and goes downwards till finding first support (2).
• Price action reverse direction from support (2) and goes upwards, till finding the second resistance (3) which must be lower than the first resistance (1).
• Price action reverse direction from resistance (3) and goes downwards, till finding the second support (4), which must be lower than the first support (2).
• The pattern is completed when price action reverse direction from (4) and goes upwards till it breaks the wedge's upper border at point (5).
TRADING THE PATTERN
• Trade entry: after breaking the wedge's upper border at point (5), with an entry after confirming the breakout.
• Take profit: identified by measuring the vertical distance from the wedge's highest high (1) to the wedge's lower border, that measurement is then applied from the breakout point (5).
• Stop loss: the wedge's lowest low (4).