![]() ![]() This chart pattern remains in place signaling a downtrend in price until the upper descending trend line is eventually broken by price to the upside. Notice that the $SPY chart below had lower lows and lower highs for several weeks creating a descending upper trend line. Less depth in lows indicate a decrease in the strength of selling pressure and should create a lower trend line of support with less declining slope than the upper line of resistance. This pattern creates lower lows, but the new lows should become less in magnitude.This is usually a longer-term pattern that generally forms over a three to six-month timeframe but can also appear on shorter time frames.The bullish bias in this pattern will not be signaled until a breakout back above the descending resistance to show this is a reversal pattern from lows in price. ![]() This price action forms a descending cone shape that trends lower as the vertical highs and vertical lows move together to converge.The descending wedge is a bullish chart pattern that begins with a wide trading range at the top and contracts to a smaller trading range as prices trend down.The descending wedge is a bullish pattern regardless of what kind of market it occurs in.When it is a reversal pattern, the falling wedge trends down when the overall market is in a downtrend. When it is a continuation pattern it will trend down, however the slope in the wedge will be against the overall market uptrend. The descending wedge chart pattern more commonly known as the falling wedge can fit in the continuation or reversal category. ![]()
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