Falling Wedge Patterns: How to Profit from Slowing Bearish Momentum

The falling wedge is a bullish price pattern that represents a story about the market in which bulls are preparing for another push. In cryptocurrency trading, buying an asset from a logical position is more likely to provide success than randomly buying an asset without applying technical analysis. Therefore, keeping falling wedge patterns as a main pattern in your trading checklist is a great way to make money from the crypto market. This article explains the falling wedge pattern’s bullish indication in crypto charts, along with its use as both trend continuation and reversal pattern.

Is a Falling Wedge Pattern Bullish or Bearish?

A falling wedge pattern is bullish, although it appears after a bearish trend. It signifies that bulls have lost their momentum, and bears have temporarily taken control over the price. As a result, the price starts to make new lower lows, but at a corrective pace. 

Crypto prices rarely move in a straight line. Rather, like most assets they tend to zigzag, with swing lows and highs forming, even if the price remains within a trend. Therefore, investors often experience temporary bearish correction within bullish trends, giving rise to patterns like the wedge, triangle, flag or channel. 

These are signs that buying pressures are being reduced due to profit-taking. The uniqueness of the falling wedge pattern is that it can produce a higher accuracy of trade than a traditional descending channel.