Rising Wedge Pattern: Bearish Exhaustion Reversal
Trade the rising wedge: narrowing higher highs, bearish exhaustion, and high-probability short setups.
Why rising wedges are bearish
A rising wedge has both trendlines pointing up, but the upper line rises more slowly than the lower — the move is narrowing. Each new high takes more effort. This signals buyer exhaustion: momentum is fading even as price makes new highs. Breaks are to the downside ~70% of the time when the wedge forms at the end of an extended rally.
Execution
Short on the breakdown below the lower wedge trendline, with a stop above the most recent high. Target: the wedge height (widest point) projected down from the breakdown. The measured move often carries price back to the start of the wedge.
Failure modes
Wedges that form as continuation (mid-trend) are less reliable than wedges that form at major highs. Also, wedges on noisy instruments (low-volume small caps) fail more often because the trendlines aren't respected cleanly.