Chart Patterns: A Trader's Study Guide

Learn the chart patterns that actually matter. Each one shows what the pattern means, how it is traded, the common mistakes, and how to journal your pattern trades so you find out which ones you trade well.

Watch: support, resistance, and trendlines

Trendlines, support, and resistance are the building blocks of every chart pattern. This walkthrough from the xVyperTv Trades channel shows how to draw them like a pro.

Reversal

Head and Shoulders

A head and shoulders is a bearish reversal pattern made of three peaks: a higher middle peak (the head) between two lower peaks (the shoulders), with a neckline connecting the lows. It signals a possible top after an uptrend.

Inverse Head and Shoulders

An inverse head and shoulders is a bullish reversal pattern made of three troughs: a lower middle trough (the head) between two higher troughs (the shoulders), with a neckline across the highs. It signals a possible bottom after a downtrend.

A double top is a bearish reversal pattern where price rallies to a resistance level, pulls back, then fails to break through on a second attempt, forming two peaks at a similar high. It often marks the end of an uptrend.

A double bottom is a bullish reversal pattern where price drops to a support level, bounces, then holds that same level on a second test, forming two troughs at a similar low. It often marks the end of a downtrend.

A rising wedge is a usually bearish pattern formed by two upward-sloping trend lines that converge, with higher highs and higher lows losing momentum. It often resolves with a breakdown.

A falling wedge is a usually bullish pattern formed by two downward-sloping trend lines that converge, with lower highs and lower lows losing momentum. It often resolves with a breakout higher.

Continuation

Ascending Triangle

An ascending triangle is a usually bullish pattern formed by a flat resistance line on top and a rising support line of higher lows beneath it. It often resolves with a breakout above resistance.

Descending Triangle

A descending triangle is a usually bearish pattern formed by a flat support line on the bottom and a falling resistance line of lower highs above it. It often resolves with a breakdown below support.

A bull flag is a bullish continuation pattern made of a sharp rally (the pole) followed by a small downward-drifting consolidation (the flag), which usually breaks out to continue the move higher.

A bear flag is a bearish continuation pattern made of a sharp decline (the pole) followed by a small upward-drifting consolidation (the flag), which usually breaks down to continue the move lower.

A cup and handle is a bullish continuation pattern made of a rounded base (the cup) followed by a small downward drift (the handle), which usually breaks out above the cup's rim to continue higher.

A pennant is a continuation pattern made of a sharp move (the pole) followed by a small symmetrical, converging consolidation (the pennant), which usually breaks out in the direction of the original move.

Bilateral

Symmetrical Triangle

A symmetrical triangle is a bilateral consolidation pattern formed by lower highs and higher lows that converge toward a point. It signals a coiling market that can break in either direction.

A rectangle is a bilateral consolidation where price ranges between a flat support level and a flat resistance level, bouncing between them until it breaks out of one side.

More study guides

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