What is a bearish wedge?

A bearish wedge can either be a continuation pattern or a reversal pattern. This depends on which direction the market was going before the pattern happened.

During this time a stock will bounce between 2 upward moving lines. Finally it will breakout to the downside. This downward breakout is considered to be the sell signal.

In this example this bearish wedge is a continuation pattern. It started rising up, making a very short term bullish trend. Finally it broke support.

To be considered a valid breakout the stock should have at least 5 bounces off of support and resistance before it actually breaks out.

trading the pattern Professional traders sould wait for it to break its support level. Once it does they may consider doing a short, or another bearish strategy with a stop above its old support.

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