[I]In this first example, a rising wedge formed at the end of an uptrend. Notice how price action is forming new highs, but at a much slower pace than when price makes higher lows.
See how price broke down to the downside? That means there are more forex traders desperate to be short than be long!
They pushed the price down to break the trend line, indicating that a downtrend may be in the cards
In the chart example above (in addition to what TradeItSimple wrote) most traders would probably wait for a short entry once the breakdown below the ascending support level occurred (second big red candlestick). This candlestick illustrates that more downside should be expected (there are always expectations and sometimes you could see a quick snap-back before the sell-off continues. You should also never rely on one indicator only. I always look for at least three signals before taking my trade.
It means that the lower side of the wedge is sharper than the upper side, which actually generates the wedge. While there are higher tops, there are also even higher lows, which at some point would bring the upper and the lower side of the wedge to an interaction.
