The Falling Wedge is a bullish reversal pattern seen on stock, commodity and other asset price charts. It is similar to the descending triangle, with one key difference. Instead of a horizontal lower boundary line, the falling wedge has an angled downward sloping line.
The falling wedge is created by drawing trend lines at the bottom of a series of lower lows and at the top of a series of lower highs. The resulting pattern shows prices contracting, until finally they breakout, usually in a bullish uptrend.
Falling wedges can also be a continuation pattern when they occur against the prevailing trend as a consolidation of prices. Whether a falling wedge occurs as a reversal of a continuation pattern, it is always considered bullish.