Pattern Reality Check / Rising and falling wedges

PATTERN REALITY CHECK · CHART PATTERNS · TESTED 8 OCT 2026

Rising and falling wedges: does it work after costs?

Both lines slope the same way and squeeze. Courses say a rising wedge breaks down and a falling wedge breaks up.

No detectable edge after costs

Verdict

No detectable edge after costs

Applied mechanically to 29 coins, this rule showed no detectable edge after costs: the average is within the range of luck, and it does not beat entering at random in a way that holds up.

Average per trade-2.8%-0.028Rof the amount risked, after costs and funding. 95% range: -10.7% to +5.2%.

Trades tested3,35629 coins2020-06-06 to 2026-09-23, 4-hour candles.

Trades won35%needs 36% to break evenWins averaged +1.778R, losses -0.983R.

Against random entries55%of random runs beatenRandom entries averaged -3.0%, because costs hit every trade. Beating them is not enough: the average must also be clearly above zero.

Percentages are % of the amount risked per trade. New to R? Read this first.

What courses teach

The idea

Rising and falling wedges are taught as reversal patterns: price keeps making new highs (or lows) but with shrinking momentum, and the break against the trend is said to start a move back.

The rules we froze

These numbers are the usual textbook values. They were written before we saw a single result and were not changed afterwards.

PartRule, fixed before the test

Signal

Two converging lines sloping the same direction, fitted through confirmed swings, narrowing by at least 25%, 20 to 100 candles long.

Entry

Market order at the first close beyond the line against the slope (down for a rising wedge, up for a falling wedge), within 25 candles.

Stop

0.25 ATR beyond the last swing on the opposite side.

Target

The width of the wedge at its start, projected from the break.

Time limit

Closed after 60 candles (10 days) if neither stop nor target was hit.

Costs

0.14% round trip plus real funding, charged on every trade.

What it looks like

Examples, good and bad

Two real trades picked by a fixed rule, not for being pretty, and six drawn at random from the held-back period (the most recent two years). 3 of the 6 won. Examples show the rule, they are not results: the results are the numbers further down.

Rising and falling wedges example that reached the target

Rising and falling wedges example that was stopped out

Results

Trade after trade

All 3,356 trades added up, with the three periods shaded. The right axis shows euros if you risked €100 on each trade. The dashed line is what random entries would have done.

Rising and falling wedges cumulative result

By period

The same average, split by period. The black bars are the 95% range: if they cross zero, we cannot tell the result from luck.

PeriodTradesAverage per tradeTrades won95% range

Build

1,528

-7.1% -0.071R

33.2%

-17.3% to +3.9%

Validation

1,254

+7.4% +0.074R

37.3%

-7.8% to +22.3%

Held-back

574

-13.5% -0.135R

32.2%

-29.9% to +4.4%

Rising and falling wedges result by period

By version

VersionTradesAverage per tradeTrades won

Long

1,754

-8.9% -0.089R

32.0%

Short

1,602

+3.9% +0.039R

37.5%

Falling wedge

1,754

-8.9% -0.089R

32.0%

Rising wedge

1,602

+3.9% +0.039R

37.5%

How the trades ended

Rising and falling wedges trade outcomes

The honest yardstick

Compared with entering at random

A pattern should beat luck, not zero. We ran 1,000 simulations that enter at random times on the same coins and periods, in the same direction, with the same stop distance, target and time limit.

Rising and falling wedges compared with random entries

In plain words

Why the numbers look like this

Random entries lose too. Entering at random times with the same stops and targets averaged -3.0% per trade (-0.030R) because of fees, funding and spread. The pattern averaged -2.8% and did better than 55% of 1,000 random runs. That is the honest comparison: not zero, but what luck plus costs produce.

Before costs: +0.6%. After costs: -2.8%. Fees, funding and slippage took 3.4% of the amount risked from every trade, on average. Even with zero costs the average is close to zero.

Win rate versus break-even. It won 34.6% of trades. With average wins of +1.778R and losses of -0.983R, it needed 35.6% to break even. The win rate is below what it needs.

Opposite side, same stops. Taking the opposite direction on every signal, with the same stop distance, averaged -6.6%. If the pattern carried real information, the pattern direction should beat its mirror by a clear margin. Here the gap is 3.9 percentage points.

Consistency across time. The average was positive in 1 of 3 periods. A real edge should not depend on which period you look at.

Sensitivity. Across 32 variations of the rule, 8 were positive and 24 negative. The best variation (+5.4%, 3,358 trades) is not a result: with 32 variations, a few green cells appear by chance. We look for a broad green region.

Stress tests

Does it survive changes?

Changing the pattern shape

Each cell is the same test with a different setting. The outlined cell is the rule we froze. Green is positive, red negative. We do not pick the best cell: we look for a broad region.

Rising and falling wedges sensitivity to shape

Changing the exits

Same idea for the target and the stop.

Rising and falling wedges sensitivity to exits

Changing the costs

CostsAverage per trade

No costs, funding only

+0.5% +0.005R

Half the costs

-1.1% -0.011R

Our costs (0.14% + funding)

-2.8% -0.028R

Double costs

-6.0% -0.060R

Triple costs

-9.3% -0.093R

Another timeframe

On daily candles the same rule gave +10.6% over 499 trades.

Coin by coin

9 of 29 coins had a positive average. With a few dozen trades per coin, some are always positive by chance.

Rising and falling wedges result by coin

Limits

What this does not say

It does not say rising and falling wedges never works. It says this version of the rule, applied to every case, shows no detectable edge after costs in this data.
It is a simulation. Real fills, delays and emotions make results worse.
The market may change. Results from the past are not a forecast.
We publish tests of popular patterns, we do not publish or comment on strategies we use ourselves.

Method: how we test · Errors: corrections · Education only, not investment advice.

Questions

Questions about rising and falling wedges

Does rising and falling wedges work in crypto?

In our test of 3,356 trades on 29 crypto perpetuals, with real costs and funding, the average result was -0.028R per trade (-2.8% of the amount risked). Verdict: no detectable edge after costs. This applies to the textbook rule defined on this page, not to every way of using it.

Why do I see charts where rising and falling wedges worked?

Because any rule produces winning examples. A chart that shows a winner says nothing about how often the same rule fails. The test above applies the rule to every case, with costs, without picking.

What would make this result change?

A different timeframe or market, different exits, or filters that add information the pattern does not contain. We tested a second timeframe and 32 variations of the rule; the numbers are on this page.

How should I read the percentages?

They are percentages of the amount you risk per trade, not of your account or of the coin price. -2.8% means -2.8% of the amount risked, on average. See what is R.