Falling Wedge

A falling wedge is a bullish chart pattern in technical analysis characterized by a series of lower highs and lower lows, converging to form a wedge shape. It indicates a potential reversal of a downtrend and the beginning of a new uptrend.

Example:

Let's say Bitcoin has been in a downtrend for several weeks, consistently making lower highs and lower lows. During this downtrend, a falling wedge pattern forms on the price chart, showing decreasing selling pressure and potential accumulation by buyers.

Case:

1. Bitcoin's price has been steadily declining over the past month, forming lower highs and lower lows.
2. However, during this decline, the price action starts to narrow, forming a falling wedge pattern.
3. As the pattern progresses, the selling pressure diminishes, and buyers become more active, leading to a breakout above the upper trendline of the wedge.
4. Following the breakout, Bitcoin's price experiences a significant rally, confirming the bullish reversal signaled by the falling wedge pattern.