Wedges & Rectangles
Two more consolidation shapes: converging counter-trend wedges (reversal-leaning) and clean horizontal rectangles (continuation-leaning).
Continuation PatternsIntermediate 5 min read· Lesson 6 of 6 in Chart Patterns
Structure & psychology
RISING wedge: both boundaries rise but converge — each push gains less; momentum starving, typically resolves DOWN (especially after long rallies). FALLING wedge: the bullish mirror. RECTANGLE: flat top and bottom — a fair-value zone where price ping-pongs until one side exhausts; usually continues the prior trend.
Entry
Wedge: break of the lower boundary (rising) / upper (falling). Rectangle: close beyond either horizontal edge; range traders also trade INSIDE big rectangles, boundary to boundary.
Stop loss
Wedge: beyond the opposite boundary or last swing. Rectangle: just beyond the broken edge after a breakout (failed-break protection) or the opposite edge for range trades.
Target
Wedge: the wedge's back height. Rectangle: the range height projected from the break.
Failure conditions
Wedge 'breaks' that instantly reverse (common — demand confirmation); rectangles so wide and choppy that edges are zones of wicks rather than lines.