The Falling Wedge Pattern Explained (Best Crypto Breakout Setup?)

追加: 2026-05-31

[00:00:00]The falling wedge pattern is one of the most important patterns to understand in crypto trading as it can generate for you beautiful trading ideas with massive profit targets. This has been one of the patterns that in my trading career has given me some of my best trades of all time. In this video, I'm going to break down everything you need to know in order to understand, identify, and trade this pattern. What's up, guys? It's Jordan here from Coin Bureau Trading.

[00:00:27]And if you are new, subscribe to the channel and be sure to stay tuned until the end of the video to get all of the important information. If you are trading along with us, be sure to use the BBET link in the description to sign up an account to take advantage of the beautiful benefits there that we have organized for this community. Also, subscribe to my personal trading channel for full crypto trading tutorials on an intermediate, a beginner, and a pro level. Be sure to put on the notifications there. Also for the live trading streams where we trade as a community, you can also join our Discord community server where I am dropping my technical analysis throughout the week and our community are trading and learning together here on a daily basis.

[00:01:08]We can see here by the P&L share group that the crew is absolutely killing it using our strategies. So let's do a little bit of an intro now into the psychology behind the falling wedge pattern and how it differs from the descending parallel channel which does look quite similar. A falling wedge pattern is bullish. It signifies that for the moment, the bulls have lost momentum and the bears have temporarily taken control over the price. As a result, the price starts to make nearer lows, but at a corrective pace. Crypto prices rarely move in a straight line.

[00:01:40]They tend to zigzag with swing lows and highs, even if price remains within a trend. So we often experience temporary bearish corrections within bullish trends giving rise to patterns like the falling wedge, triangle squeezes, flags and channels. There are signs that buying pressures are being reduced to profit taking. And the uniqueness of the falling wedge pattern is that it can produce higher accuracy for powerful breakout trades than the descending channel. Because the falling wedges swing levels actually create a squeeze.

[00:02:11]This leads to much stronger explosive breakout moves. And these can be great for sniper entries. Now, let's go into how to identify these falling wedge patterns. Bullish trends and especially in crypto form after a significant event by encouraging buyers to long an asset with the hope of future price appreciation. However, it's often difficult for investors to hold this position for a long time. They usually end up booking profit after getting some benefit, often adding more positions when the price is discounted. As a result, the bearish wedge pattern that we see after a bullish trend is partially the result of buyers profit taking once the profit taking is over and the price finds a dip. This is when investors will begin to buy again. The trading approach with the falling wedge pattern is to find when the correction is over and the bullish trend is likely to resume. The global financial market is driven by institutional traders who need liquidity. There have to be enough buyers to sell and enough sellers to buy. Therefore, patterns like the falling wedge indicate that institutional traders who've created the bullish trend might open more buying positions, resuming the trend after the discount. Besides the swing levels within the pattern, traders should monitor how the volume is changing. As the price moves through the consolidation phase, the volume should reduce and this is due to less trading activity. However, once the breakout happens, it should be supported by higher volume. In this image, we can see that the volume is higher as the pattern commences, but it does decrease throughout the pattern and then increase at the breakout again. Now, let's get into how to trade the falling wedge pattern. And this can be split into two slightly different types. Let's start with the falling wedge as a continuation pattern. This pattern can often form within a major bullish trend and just serve as a consolidation and give a very nice entry back into that continuation of the trend. Here we can see a practical example of this pattern used as a continuation within a bullish trend. And this continuation is confirmed once price breaks above the resistance within the falling wedge.

[00:04:15]Here we can see how to trade this pattern from the breakout. And it is important to understand how to manage fakeouts. There is a full tutorial on this on this channel under my playlist.

[00:04:25]So check it out. In this instance, the buying setup is still valid as long as the candles are above the resistance of the wedge. And as usual, the stop loss should be below the previous major swing low. Make sure you do use Fibonacci for your gradual take-profits. And of course, take your risk-to-reward ratio into account. You can use the distance from the top of the falling wedge to the bottom at the start of the pattern to extrapolate your price target from the breakout. Then the falling wedge pattern can also act as a reversal pattern within a downtrend. And this happens when bears are losing momentum and the bulls want to step in to reverse price.

[00:05:01]Here you can look for a strong downtrend which is losing momentum and beginning to bottom. Here we can see how the strength of a downtrend can be measured by the gaps between the swing lows. And if these gaps are getting smaller, the bears could be losing momentum. When locating this, try to look for the following confirmations. The falling wedge appears at the bottom of a downtrend. The downtrend has become weaker before forming the wedge pattern.

[00:05:25]There are at least three touches at the trend line levels of the falling wedge and price is reaching an important demand zone from which the bulls usually open their orders. The trading approach of the falling wedge as a reversal pattern is much the same as the continuation version. The entry becomes valid when the price moves above the falling wedge resistance with a strong bullish breakout or retest. And again, the stop loss should be below the previous swing low. The more conservative traders will wait for the retest after the breakout, and the more aggressive traders will trade the breakout after multiple candle closes.

[00:05:58]This is a matter of risk appetite as the aggressive traders will get more trades, but also more false signals. Be careful not to confuse the falling wedge with the descending triangle. And I will be making a tutorial on this pattern in the coming videos. And another one to be careful of confusing with the falling wedge is the bull flag or bare flag patterns. I have just dropped a video on this, so I hope most of you have already seen it. As a summary, overall the falling wedge pattern is a great way to spot trend reversals and continuations with very profitable trading opportunities. The key points to remember here are the falling wedge is a bullish pattern. There should be at least three touches at the trend lines of the falling wedge in order to confirm the pattern. The pattern becomes tradable once the price breaks out above the trend line resistance with a strong bullish candle and momentum or a retest.

[00:06:50]The entry is confirmed after a breakout and a bearish correction to a retest.

[00:06:55]However, in some cases, the price may move higher without any retracement. The ideal stop-loss approach is to set it below the nearterm major swing low with some buffer.