When the support and resistance lines are converging and are both rising or falling, we have a wedge. A wedge formation implies that the share price has a high probability of breaking out in the reverse direction to its current movement.

Ascending Wedge

An ascending wedge is one that has the support and resistance lines converging and both trending upwards. The support is ascending at a steeper slope as compared to the resistance, hence there is a high probability for the share price to break out downwards as the steeper slope is less substainable. Below is an example of STATS Chipac.

Descending Wedge

A descending wedge, which has the support and resistance lines converging and both trending downwards, is the exact opposite of an ascending wedge. The resistance is descending at a steeper slope as compared to the support, hence there is a high probability for the share price to break out upwards as the steeper slope is less substainable. Below is an example of Natsteel.