Scan 5,000+ stocks for falling wedge patterns. Converging downward trendlines with declining volume signal impending bullish breakouts. Each setup graded A+ to B.
Run this scan →The falling wedge is one of the most reliable bullish reversal patterns in technical analysis. It forms when a stock makes a series of lower highs and lower lows, but the lows decline faster than the highs — creating two converging downward-sloping trendlines that form a wedge shape. This convergence reflects a critical shift in market dynamics: while selling pressure continues, it is diminishing at an accelerating rate as the wedge narrows toward its apex.
The key to understanding the falling wedge lies in its volume profile. During the formation, volume should steadily decline, confirming that sellers are losing conviction with each successive push lower. The narrowing price range combined with declining volume creates a coiled-spring effect — the stock is compressing into an increasingly tight range with decreasing energy on the downside. When buyers finally overwhelm the diminishing supply, the breakout above the upper trendline can be explosive, often retracing a significant portion of the prior decline.
Our scanner analyzes the last 60 bars of price data across 5,000+ stocks, identifying swing highs and swing lows using 3-bar pivot logic. We fit linear regression trendlines through these pivots, verify that both slopes are negative with the lower trendline steeper, measure convergence (minimum 30%), confirm declining volume, and check that price is in the final 25% of the wedge — near the apex where breakouts are most imminent. Each setup is graded based on convergence strength, volume confirmation, proximity to the apex, and position relative to the 200-day SMA.
The falling wedge pattern has been recognized by technical analysts since the earliest days of chart reading. Edwards and Magee included it in Technical Analysis of Stock Trends (1948) as a bullish reversal formation, noting that the converging downward trendlines reflect diminishing selling pressure. Richard Schabacker documented the pattern even earlier in Technical Analysis and Stock Market Profits (1932). Thomas Bulkowski's Encyclopedia of Chart Patterns (2000) provided statistical validation, finding that falling wedges break upward approximately 68% of the time. The pattern gained renewed attention in modern quantitative trading as algorithmic scanners made it possible to systematically detect the specific trendline convergence and volume signatures across thousands of stocks simultaneously.
Our scanner evaluates the following criteria when detecting Falling Wedge Scanner setups across 5,000+ stocks daily.
For falling wedge setups, an A+ grade means convergence above 50%, declining volume, current price near the wedge apex, and price above the 200 SMA. An A grade requires 40%+ convergence with declining volume. B+ requires 30%+ convergence. B meets minimum wedge criteria. This is not a prediction of future price movement — it is a way to prioritize which charts deserve your attention first.
Buy on a breakout above the upper trendline of the wedge, confirmed by a volume surge (1.5x+ average). Alternatively, buy on a retest of the broken trendline from above — this pullback entry offers a tighter stop and better risk/reward.
Place stop below the most recent swing low inside the wedge, or below the lower trendline if the entry is on the breakout candle. If price falls back inside the wedge after breaking out, the pattern has failed.
The measured move target equals the height of the wedge at its widest point, projected upward from the breakout level. Take partial profits at the 50% target and trail the remainder with the 21 EMA. Many falling wedge breakouts retrace the entire prior decline.
This is educational content only. Not financial advice. Always do your own research and manage risk appropriately.