0.8%To entry+11.0%expected42.2%Hist. win rate
ICHRLong
Falling Wedge: Recognizing the Shape and Planning a Breakout
A falling wedge has two downward-sloping boundaries that draw closer together. Learn why traders watch its upper boundary, how the trade works and how to assess its historical results.
What Is a Falling Wedge Pattern?
A falling wedge is a declining price range that narrows over time. Both its highs and lows fall, but the line across the highs falls more steeply than the line under the lows. The two boundaries converge.
Imagine a stock’s daily swings narrowing from a $6 range to a $3 range as it moves lower. This illustrative change makes the wedge easier to see. It describes a smaller range during the decline, while the direction of the next break remains uncertain.
A wedge can form during a pullback in a longer rally or during an extended decline. Use the trend line basics guide to review how its boundaries are drawn.
How to Spot a Falling Wedge
Use these features to check the shape:
- Both the highs and lows fall.
- The upper boundary falls more steeply than the lower one.
- Distinct turning points define both lines.
- The range narrows, with space remaining between the boundaries.
Compare the slopes before naming the pattern. Roughly parallel falling lines form a channel. In a wedge, the distance between the lines decreases.
Falling Wedge vs Rising Wedge vs Triangles
Compare the boundaries and the move preceding the consolidation to distinguish these related patterns.
A rising wedge has two upward-sloping boundaries, with the lower one rising more steeply.
A descending triangle has a roughly horizontal lower boundary. In a falling wedge both boundaries slope down.
A bull pennant is a small pause immediately after a sharp rally. A falling wedge can form without that rally.
Is a Falling Wedge Bullish or Bearish?
Traders watch a falling wedge for an upward break because the declining range is narrowing. The bullish entry starts only when price reaches the trigger beyond the upper line.
If price continues lower through the wedge, the proposed upward breakout has not occurred. If it breaks upward and then reverses, the position follows the safety-exit rule described below.
Entry, Safety Exit and Target
The following steps describe TradingPal’s historical simulation. Choose each step on the diagram to see where the price level sits. The risk/reward guide explains how the distance from entry to the safety exit becomes the planned risk, or 1R.
1.Entry
The simulation places its entry trigger above the upper boundary. The pattern must have been established on an earlier daily candle. The first eligible candle to reach the trigger can fill the order. If price gaps past it overnight, the simulation uses the worse opening price.
2.Safety exit
The planned invalidation level sits below the last low before the breakout. The test closes the trade at the close of a later daily candle beyond that level. Price can overshoot it or gap past it, so the actual loss can exceed the planned 1R.
3.Target and final exit
Measure the pattern’s height at its widest point and project that distance from the entry trigger in the direction of the trade. This is the measured-move target. Reaching the upside target activates a trailing exit based on the 10-day moving average, the average of the last ten daily closing prices. The trade ends on a later close below that average.
The entry trigger sits beyond the breakout boundary. After prior-day establishment, the simulation uses the first eligible fill; a gap can produce a worse opening price.
Checks Before Using the Pattern
- Check that the boundaries converge. Roughly parallel lines describe a channel.
- Check whether price has already reached the intersection of the lines or broken out and returned. Those events change the setup available to trade.
- Recalculate risk and potential reward if the entry price changes. A later entry can leave less distance to the target and more distance to the safety exit.
- Write down the exit rule before entering. The historical result assumes that rule was followed, including exits that lost more than the planned risk.
Historical Results for the Tested Rules
The table summarizes simulated trades using the entry and exit rules above. Check the direction, sample size and measurement period before comparing rows. These results update when a new historical run is published.
Read win rate together with the size of the wins and losses. A strategy can win half its trades and still gain or lose overall. Average R and profit factor help explain which happened; the track-record metrics guide covers the calculation.
The published pattern group includes shapes that passed later confirmation checks. That can affect which historical trades enter the sample, even when the simulated fill uses prices available at the time. The backtesting methodology explains this limitation and the portfolio assumptions.
Win rate
44.3%
Avg return per trade
+2.9%
+0.34R in risk units
Backtested trades
1,149
Profit factor
1.59
gross positive R ÷ absolute gross negative R
Historical results of the simulated strategy described above (2006-10-13 – 2026-09-09), refreshed nightly — not a prediction. How we test →
Winning and Losing Examples
The examples below are selected completed trades from the historical simulation. Compare the entry and exit in each, including the losing trades. Opening a symbol takes you to its current chart.
Selected for learning, with a mix of wins and losses where available. Closed in the 90 days ending Sep 11, 2026. This selection is not a win-rate sample.
BBWIBath & Body Works
Losing trade · −12.6%
Opened Sep 4, 2026
Closed Sep 10, 2026
Open BBWI’s live chart →
CEGConstellation Energy
Winning trade · +9.1%
Opened Jul 14, 2026
Closed Sep 10, 2026
Open CEG’s live chart →
KHCKraft Heinz
Losing trade · −5.9%
Opened Aug 31, 2026
Closed Sep 10, 2026
Open KHC’s live chart →
FMCFmc
Winning trade · +10.5%
Opened Aug 20, 2026
Closed Sep 10, 2026
Open FMC’s live chart →
LNTAlliant Energy
Losing trade · −1.6%
Opened Sep 8, 2026
Closed Sep 10, 2026
Open LNT’s live chart →
FNDFFundamental International Large Company Index
Winning trade · +3.9%
Opened Jul 21, 2026
Closed Sep 10, 2026
Open FNDF’s live chart →
Two Ideas We Put to the Test
A convincing chart can leave you with questions about what really works. These dated studies explain two findings in plain English, with illustrations, full results and the limits of each comparison.
Removing the confirmed loose wedges reduced the simulated account’s growth. Does a tighter falling wedge make a better trade?
Holding longer improved average trade payoff, but the older multi-pattern account grew more slowly. Can holding through a pullback hurt the whole account?
Stocks with a Falling Wedge Pattern Right Now
Our screener re-draws these lines on 2,600+ symbols every night and flags each chart that fits the checklist above. The current matches appear below.
60 fresh falling wedges formed in the last 45 days across our growing universe of 2,600+ scanned symbols (75 charts tracked for this pattern in total). Scan updated Sep 11, 2026.
Live · from the latest scan on Sep 11, 2026
60 structures found. See example
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See the full offeringFalling Wedge Pattern FAQ
Is a falling wedge bullish or bearish?
It is commonly watched for an upward break. The tested bullish position starts at the upward trigger and has a defined safety exit if the move reverses.
What starts a falling-wedge trade?
Price must reach the trigger beyond the upper boundary after the pattern could be established on an earlier daily candle. A visible wedge alone does not start the simulated trade.
What is the target for a falling wedge?
Project its widest height upward from the entry trigger. After that target is reached, the tested bullish policy exits on a later close below the 10-day moving average.
How does a falling wedge differ from a bull flag?
A bull flag has roughly parallel boundaries and follows a sharp rally. A falling wedge has converging boundaries and does not require a preceding rally.
How reliable is a falling wedge?
Use the historical results for the stated entry and exit rules. Win rate, average R, profit factor and sample size together describe those trades more fully than a single percentage.
Keep Learning
Rising Wedge
A rising wedge has two upward-sloping boundaries that draw closer together.
Read the guide →
Descending Triangle
A descending triangle combines repeated lows near one price with falling highs.
Read the guide →
Bullish Pennant
A bullish pennant forms when a sharp rally pauses in a small, narrowing range.
Read the guide →
Educational content, not investment advice. Backtest statistics are historical results of a simulated strategy, refreshed nightly — they describe the past, not the next trade.