A falling wedge is a rebound formation that is formed in a downtrend. A falling wedge are formed with gradually decreasing volume.
The difference between the lows and peaks is gradually decreasing and this results in two trend lines that gradually approach each other. Two downward-sloping trend lines are drawn for a falling wedge, a resistance line along the peaks and a support line along the bottoms. The price target for a falling wedge is the top level of the first peak in the formation. A buy signal is generated when the upper resistance line is crossed under increasing volume.
