What Are Wedge Patterns in Trading?

What is a wedge pattern?

A wedge is a price compression pattern. Both highs and lows trend in the same direction, but at different slopes — so the trendlines converge.

• Rising wedge: higher highs and higher lows, with the lower trendline rising faster than the upper. Bias: bearish (reversal in uptrends, continuation in downtrends).
• Falling wedge: lower highs and lower lows, with the upper trendline falling faster than the lower. Bias: bullish.
• Symmetrical compression (sometimes called a coil or triangle): highs trending down, lows trending up, range tightening. Direction-neutral — breaks in whichever side has stronger volume.

A typical wedge takes 10–30 bars to form on a 5-minute or daily chart. Anything shorter is noise; anything longer behaves more like a base.

Why wedges predict breakouts

The mechanism is volume + range compression.

1. Volume dries up. As price oscillates inside the wedge, the marginal buyer disappears. The UnxEdge scanner tracks this with dryup_ratio — the ratio of 5-bar volume to 20-bar volume. A reading below 0.6 means current volume is well under recent average.
2. Range narrows. Each push to one side gets smaller. The spring is coiling.
3. One side runs out of inventory. The next catalyst — news, sector flow, market open — snaps the range.

The breakout move typically equals the height of the pattern. A wedge that's $2 tall projects a $2 follow-through.

How to identify wedge patterns on charts

Three rules:

1. Converging trendlines. Draw a line connecting at least two highs and another connecting at least two lows. They must converge in the future.
2. Touches. ≥ 2 touches on each trendline. More is stronger, but past ~50 bars the wedge starts losing energy.
3. Volume drying. If volume is rising during consolidation, the pattern isn't setting up — it's already breaking down (you just haven't seen it yet).

Common traps to avoid:

• Gaps inside the consolidation mean the wedge broke and reformed — treat each segment separately.
• A wedge that forms after a major news event is fragile; the move may already have happened.
• Tight wedges on illiquid stocks (RVOL < 0.5) tend to fakeout. Volume is the confirmation, not the trigger.

How UnxEdge detects wedges automatically

The scanner runs a wedge-geometry check on every symbol every 10 minutes during market hours. Each setup carries:

• consolidation_bars — how long the pattern has been forming.
• dryup_ratio — 5-bar vs 20-bar volume. Lower = more compressed.
• pressure_score — a 0–100 composite of squeeze percentile, volume dry-up, higher-lows compression, and AVWAP distance.
• grade — A++ down to B, gated by pattern quality, bias alignment, and confirmation count.

An A++ grade requires bias ≥ 8/9, pattern quality ≥ 70, confirmations ≥ 9, and a passing wedge-geometry check. B-grade setups still pass the wedge filter but are weaker on confluence. Most setups never qualify for A++ — that's intentional.