As of 11/20/2024
Indus: 43,408 +139.53 +0.3%
Trans: 17,002 -26.31 -0.2%
Utils: 1,055 +1.25 +0.1%
Nasdaq: 18,966 -21.33 -0.1%
S&P 500: 5,917 +0.13 +0.0%
|
YTD
+15.2%
+6.9%
+19.7%
+26.3%
+24.1%
|
 46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,075 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 |
As of 11/20/2024
Indus: 43,408 +139.53 +0.3%
Trans: 17,002 -26.31 -0.2%
Utils: 1,055 +1.25 +0.1%
Nasdaq: 18,966 -21.33 -0.1%
S&P 500: 5,917 +0.13 +0.0%
|
YTD
+15.2%
+6.9%
+19.7%
+26.3%
+24.1%
| |
|
46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,075 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 | ||
Statistics updated on 8/27/2020.
For more information on this pattern, read
Encyclopedia of Chart Patterns
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The falling wedge is a poor performer as far as bullish chart patterns go. The break even failure rate is high and the average rise is low. The only variation that works well is a downward breakout in a bear market and the performance rank for that is in the bottom half of the list.
The above numbers are based on over 800 perfect trades. See the glossary for definitions.
| Characteristic | Discussion |
| Price trend | Can be any direction leading to the pattern. |
| Shape | Price follows two down-sloping and converging trendlines. |
| Touches | Price should touch each trendline at least five times to outline a good pattern. That's 3 touches of one trendline and 2 of the opposite. |
| Duration | 3 weeks is the minimum duration, otherwise it's a pennant. |
| Volume trend | Trends downward 72% to 75% of the time until the breakout. |
| Breakout | Can be in any direction but is upward 68% of the time. |
| Confirmation | The pattern confirms as a valid one when price closes outside one of the trendlines. |
| Trading Tactic | Explanation | 
The Measure Rule
Dip |
| Measure rule | See the figure to the right. For upward breakouts, the highest peak in the pattern (A) is the price target. Alternatively, compute the height from the highest peak (A) to the lowest valley (B) and then multiply it by the above “percentage meeting price target.” Add it to (upward breakouts) or subtract it from (downward breakouts) the breakout price (the point at which price crosses the trendline, shown here as a blue line) to get a price target, (C). | |
| Dip | See the figure to the right. After a downward breakout, price sometimes curls around the front of the wedge and soars upward. The busted pattern presents a profit opportunity from the long side. | |
| Breakout | The average distance from the breakout is 61% to 62% of the way to the triangle apex (where the trendlines join). | |
| Confirmation | Wait for a close outside one of the trendlines before taking a position. | |
| Gap | A gap upward on the breakout day suggest a better performing wedge. | |
| Height | Tall patterns perform better than do short ones. | |
| Breakout volume | Bullish wedges (meaning upward breakouts) with heavy breakout day volume perform better. |
The above figure shows an example of a falling wedge chart pattern. After a strong upward trend, the wedge forms, dropping price to 50. Then price breaks out upward and climbs to B, short of the target price of A predicted by the measure rule. Price throws back to the breakout and continues down. This is a good example of why I avoid wedges.
-- Thomas Bulkowski
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