In the previous educational post, I posted about Rising Wedge patterns and in this post, I have explained Falling Wedge Patterns. ( Falling Wedge is the opposite of Rising Wedge pattern; for every chart pattern there are opposite patterns excluding some.)
Falling Wedges are Bullish Patterns and it generates a bullish signal, Falling wedge patterns forms with Lower highs and lower lows.
The Falling Wedge pattern forms in two shapes same as the Rising Wedge; If the Falling wedge pattern forms in an uptrend it will make a continuation and if the Falling wedge pattern forms in a downtrend it will make a reversal.
The Lower highs and the lower lows along make a trend resistance and trend support. When a breakout occurs upside, the price breaks the trend resistance line.
In a Falling wedge, a breakout occurs upside 60 to 70% of the time.
To confirm a true breakout, we can take the help of Volume and other indicators. In a true breakout, there will be big volume than usual.