How to Trade the Rising Wedge Pattern in Crypto (Step-by-Step Guide)

The rising wedge pattern is one of the most misunderstood chart patterns in trading—especially in crypto markets. While price action appears bullish at first glance, the pattern often signals weakening momentum and a potential bearish reversal. In this guide, you’ll learn how to identify, confirm, and trade a rising wedge pattern in crypto step by step, with clear rules for entry, stop loss, and take profit.

Key Takeaways

• The rising wedge pattern is typically bearish, despite appearing bullish during its formation.
• Never trade a rising wedge without confirmation—a clear breakdown below the lower trendline is required.
• Volume matters: declining volume during formation and expanding volume on the breakdown improves reliability.
• Higher timeframes are usually more reliable; lower timeframes are more prone to false breakouts.
• Two entry styles: conservative pullback entry or aggressive breakdown entry—both require a stop loss.

What Is a Rising Wedge Pattern?

A rising wedge is a technical chart pattern formed when price makes higher highs and higher lows, but within two converging upward-sloping trendlines.

Key Characteristics

To identify a rising wedge pattern, both the support and resistance trendlines slope upward, with the support line rising faster than the resistance line. As the pattern develops, the price range gradually contracts, and bullish momentum starts to weaken. During this phase, sellers (bears) slowly gain control, while buying pressure fades, even though price may still form higher highs. This structure often misleads inexperienced traders, as it appears bullish on the surface, while the underlying price action actually signals a potential bearish reversal.

Is the Rising Wedge Bullish or Bearish?

In most cases, the rising wedge is considered a bearish pattern. As price continues to move higher and forms new highs, upward momentum gradually weakens. This loss of strength is often reflected in declining trading volume, which is a very important characteristic during the formation of the wedge. A valid confirmation occurs when price breaks below the lower trendline of the wedge, usually accompanied by a noticeable increase in volume. Without a clear breakdown below the lower wedge support, the rising wedge remains unconfirmed, and no bearish signal should be assumed.

Key Trading Tip: Never trade chart patterns simply because you recognize their shape. Every technical pattern requires confirmation. Always wait for a clear confirmation signal before entering a trade, and avoid rushing in while the pattern is still forming.

Does the Rising Wedge Appear in an Uptrend or Downtrend?

The rising wedge pattern can appear in both uptrends and downtrends. The key difference lies in its market context. When a rising wedge forms during an uptrend, it is typically considered a reversal pattern, signaling a potential shift from bullish to bearish momentum. However, when the same pattern appears within a downtrend, it usually acts as a continuation pattern, indicating a temporary corrective move before the broader bearish trend resumes.

Below is an example of a rising wedge pattern forming within an uptrend on the SUI/USD 15-minute chart.

Rising wedge pattern forming within an uptrend on the SUI/USD 15-minute chart

Below is an example of a rising wedge pattern forming within a downtrend on the BNB/USDT 2-hour chart, acting as a bearish continuation setup.

Rising wedge pattern within a downtrend (BNB/USDT 2H)

When Can It Fail?

A rising wedge can fail during strong bullish trends, especially when the market is supported by powerful fundamentals or major news events. The pattern may also fail if price breaks above the upper resistance of the wedge with strong volume, signaling that buyers are still in control and invalidating the bearish structure. That’s why confirmation is critical—without a clear breakdown below support, the rising wedge should never be traded as a bearish setup.

This 4h chart of MNT/USDT shows a failed rising wedge pattern, where price initially formed the wedge structure but did not break down as expected. Instead of a bearish reversal, strong buying pressure pushed price above the upper resistance, leading to a trend change and bullish continuation.

Because no confirmed breakdown occurred, no trade was taken in this case. This example highlights why confirmation is critical—without a clear breakdown below the lower trendline, a rising wedge can fail and result in price moving in the opposite direction of the expected setup.

Example of a failed rising wedge where price breaks above resistance, invalidating the bearish setup.

How to Identify a Valid Rising Wedge

Not every upward channel is a rising wedge. A valid pattern should meet these conditions:

• At least two higher highs and two higher lows
• Both trendlines slope upward
• Support line is steeper than resistance
• Price action compresses over time
• Volume gradually declines

The more conditions met, the higher the pattern’s reliability.

Best Timeframes to Trade a Rising Wedge

The rising wedge pattern can appear across all timeframes, from intraday charts to higher timeframes. However, rising wedge patterns on higher timeframes tend to be stronger and more reliable. In general, higher timeframes reduce noise and lower the chance of false breakouts compared to very small timeframes.

This Bitcoin weekly chart clearly shows a rising wedge pattern forming after an extended bullish move. As highlighted, the structure signaled weakening momentum, and the subsequent breakdown below the lower trendline provided a high-probability short entry, confirming the bearish nature of the pattern on higher timeframes.

After the weekly candle closed below the support trendline, a pullback candle formed and retested the broken level. This pullback occurred around the 107,300 level, which provided a clear short entry opportunity.
Following the entry, price continued to decline strongly, eventually reaching the 85,000 area, demonstrating the effectiveness of waiting for confirmation and retest on higher timeframes.

                                                                        

This chart is a clear example of a rising wedge pattern forming on the Bitcoin weekly timeframe.

How to Trade a Rising Wedge (Step by Step)

The first step is to correctly identify the rising wedge on the chart and make sure it is not confused with similar patterns, such as an ascending triangle or a rising channel. Accurate identification is essential before considering any trade.

The second step is to wait for a confirmed breakdown below the lower trendline of the wedge. It is very important that this breakdown comes from a candle close, not just a wick, in order to avoid false breakouts. For example, if you are trading on the 4-hour chart, you should wait for a full 4-hour candle to close below the wedge support before treating the pattern as valid.

Once the breakdown is confirmed—which is the most critical step—there are two main entry approaches. The first approach (my preferred method based on trading experience) is the conservative entry: after the support is broken, wait for a pullback candle that retests the broken support level, then enter a short position. The second approach is more aggressive: open a short position immediately after the breakdown candle closes, especially if price is still close to the broken support.

Stop Loss Placement

• Above the most recent swing high
• Or above the upper wedge resistance

You should never place a tight stop loss inside the pattern.

Take Profit Target

• Measure the widest part of the wedge
• Project it downward from the breakdown point
• Use partial take profits to lock in gains and reduce risk

Let’s take a practical example:

Below is the BNB/USDT 2-hour chart. As shown, the rising wedge pattern was clearly identified on the chart. We then waited for a confirmed breakdown below the lower trendline, supported by a candle close, which is exactly what happened.
After the breakdown was confirmed, we waited for a pullback candle toward the broken support level and entered a short position. As you can see, the stop loss was placed above the rising wedge, protecting the trade.

The setup worked perfectly and the target was successfully reached, highlighting the importance of patience and waiting for confirmation.

BNB/USDT 2-hour rising wedge breakdown with short entry and stop loss

Let's take another example:

This DOGE/USDT chart shows a clear rising wedge breakdown followed by a retest candle, which provided a high-probability short entry. The stop loss was placed above the wedge, and price then continued lower, confirming the effectiveness of trading rising wedges with confirmation and proper risk management.

Rising wedge breakdown on DOGE/USDT with a retest entry and continuation lower

Risk Management Tips

• Never risk more than 2–3% per trade. Proper position sizing is essential for long-term survival.
• Avoid excessive leverage in futures trading. Lower leverage reduces liquidation risk.
• Do not trade rising wedges against strong trends. Counter-trend setups carry higher risk.
• Use RSI and volume alongside price action to strengthen confirmation and improve trade quality.

Discipline is more important than accuracy.

Rising Wedge vs Ascending Triangle

Although the rising wedge and the ascending triangle may look similar at first glance, they carry very different market implications. In a rising wedge, both support and resistance trendlines slope upward, with price momentum gradually weakening—often signaling a bearish reversal. In contrast, an ascending triangle features an upward-sloping support line and a flat horizontal resistance, indicating building buying pressure and a higher probability of a bullish breakout. From trading experience, misidentifying these two patterns is one of the fastest ways to end up on the wrong side of the market—especially if you ignore volume and confirmation.

The chart below illustrates a clear example of the ascending triangle pattern.

                          

Conclusion

The rising wedge pattern often signals weakening momentum and a potential bearish reversal, even when price appears to be trending higher. Trading this pattern successfully requires patience, confirmation, and disciplined risk management. In the end, consistency and capital protection matter more than being right— that’s the trading approach we focus on at CryptoFXRadar.

Frequently Asked Questions (FAQ)

Is the rising wedge pattern bearish or bullish?

The rising wedge is typically bearish, especially when confirmed by a breakdown below support. It can turn bullish only if price breaks above resistance with strong volume.

What confirms a rising wedge breakdown?

A valid confirmation requires a full candle close below the lower trendline, ideally supported by increasing volume.

Which timeframe is best for trading a rising wedge?

The pattern is more reliable on higher timeframes such as the 1H, 4H, and Daily charts, where false breakouts are less common.

Can a rising wedge fail?

Yes. It may fail during strong bullish trends or when price breaks above resistance with strong buying volume.

Should I trade a rising wedge before confirmation?

No. Trading before confirmation increases the risk of false breakouts and unnecessary losses.

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Risk Disclaimer:
This article is for educational purposes only and does not constitute financial advice. Trading cryptocurrencies involves significant risk, and you may lose part or all of your capital. Always do your own research and consult a licensed financial advisor before making trading decisions.