Trading
Chart patterns are recurring shapes that describe how a market consolidates before continuing or reversing. The useful ones are head and shoulders, double tops and bottoms, ascending and descending triangles, bull and bear flags, cup and handle, rising and falling wedges, and the support and resistance concept underneath all of them. Each has a trigger, an invalidation level and a rough measured target.
How to use a pattern properly
A pattern is not a prediction. It is a structure that gives you three specific things, and the third is the one most people skip.
A trigger
The specific event that activates the idea, usually a close beyond a defined level rather than a touch of it.
A target
A rough measured move, typically the height of the pattern projected from the breakout point.
An invalidation
The level that proves you wrong. Decide this before you enter. This is the only part that actually protects you.
The twelve patterns
Head and shoulders
Three peaks with a taller middle one, signaling that buyers ran out of strength.
How to read itReversal, bullishInverse head and shoulders
The same shape upside down, marking the end of a downtrend.
How to read itReversal, bearishDouble top
Two attempts at the same high, both rejected.
How to read itReversal, bullishDouble bottom
Two tests of the same low that both hold.
How to read itContinuation, usually bullishAscending triangle
A flat ceiling with rising lows underneath, showing buyers getting more aggressive.
How to read itContinuation, usually bearishDescending triangle
A flat floor with falling highs above it, showing sellers pressing.
How to read itContinuation, bullishBull flag
A sharp rally, then a tight orderly pullback, then continuation.
How to read itContinuation, bearishBear flag
A sharp drop, a weak drift upward, then more selling.
How to read itContinuation, bullishCup and handle
A rounded recovery followed by a small dip, then a breakout.
How to read itReversal, bullishFalling wedge
Two downward sloping lines converging, with selling losing momentum.
How to read itReversal, bearishRising wedge
Two upward sloping lines converging, with buying losing momentum.
How to read itFoundationSupport and resistance
The single most useful concept on any chart, and the base for every pattern above.
How to read itAn honest note on all of this
Technical analysis is contested, and reasonably so. Some of what makes patterns work is self fulfilling: enough people watch the same shapes that their reactions create the move.
Two things are worth holding at once. Patterns describe genuine crowd behavior at levels where a lot of decisions were previously made. And any single pattern in isolation, without trend context and volume confirmation, is close to a coin flip.
Common questions
Do chart patterns actually work?
They describe real behavior and they are not reliable in isolation. Their value is in defining a trigger and an invalidation, which lets you manage risk. Treating them as forecasts is where people go wrong.
Which pattern is the most reliable?
Support and resistance, which is not really a pattern but the concept every other one is built from. Beyond that, patterns that agree with the higher timeframe trend fail less often than ones that fight it.
How do I know if a pattern has failed?
Define the invalidation level before you enter. If price closes beyond it, the pattern failed. Deciding afterward is how a small loss becomes a large one.
Where to go next
Spot these on a live chart with us
We look at real charts together and identify what is actually forming, including the cases where the answer is nothing and you should wait.