I have been working with technical analysis for a long time and want to share a pattern that really helps catch reversals. It's about the ascending wedge — a classic signal that often triggers when a trend is changing. I noticed that many traders underestimate it, although the pattern works in both uptrends and downtrends.

An ascending wedge forms quite simply: the price is rising, but with each new high, the momentum weakens. The upper and lower trend lines converge, narrowing toward the peak. This is the main sign that buyers are losing strength. Usually, after such compression, there is a sharp breakdown downward — this is when the best entry points for shorts open up.

When I see an ascending wedge on the chart, the first thing I look at is volume. As the pattern develops, volume should decrease, indicating fewer participants. If volume increases — it could be a trap. But when the price breaks the lower support line with a sharp spike in volume, it’s almost 100% confirmation that the reversal is real.

There are two main scenarios for how an ascending wedge works in trading. The first is a reversal after a prolonged rally. The price has been rising for a long time, then starts to slow down, forms the wedge, and suddenly drops. The second scenario is a pause in a downtrend. The price was falling, then rebounded slightly upward (forming the wedge), and then continued to decline. Both options offer good opportunities for short positions.

How do I trade this pattern? I wait until the pattern is clearly formed on the chart — at least two higher highs and two higher lows are needed. Then I monitor volume, making sure it’s decreasing. The most important thing is not to enter too early. I wait for a confirmed breakdown, when the candle closes below the lower trend line. Only then do I open a short.

For target levels, I measure the height of the wedge from the very beginning of its formation and project this distance downward from the breakout point. I always place the stop-loss slightly above the upper trend line or above the last high inside the wedge. This protects against false breakouts, which sometimes happen.

There’s also an interesting moment — retesting. After the breakdown, the price may return and retest the lower line (which now becomes resistance). If you see such a scenario, it’s a second opportunity to enter a position. Many traders miss this point, but it’s often the most accurate.

To confirm signals, I use indicators. RSI helps catch bearish divergence — when the price is rising but the indicator is falling. MACD shows a bearish crossover close to the breakdown. Moving averages are also important — if the price is below the 50-EMA, it strengthens the bearish signal. Volume remains the main factor — without it, everything else is less reliable.

Mistakes I avoid: not entering a trade before a confirmed breakdown, ignoring volume, always using stop-losses. It’s also important to remember that not every ascending wedge works the same way. The pattern must meet clear criteria; otherwise, it could just be a random price movement.

An ascending wedge in trading is one of the most reliable patterns for catching reversals. The main thing is patience and discipline. Wait for confirmation, check volume, manage risk with stop-losses, and results will follow. False signals will still occur, but if you stick to the rules, profitability will outweigh losses.