Master Technical Analysis
Chart Patterns Guide
Identify potential trend reversals or continuations with these powerful price formations.
What are chart patterns?
Chart patterns are recognizable price formations that occur repeatedly in financial markets. They represent the psychology of market participants and can signal potential price movements. Patterns are categorized into two main types: reversal patterns (indicating a trend change) and continuation patterns (suggesting the trend will continue after consolidation).
How to use chart patterns
- Identify: Recognize the structure on higher timeframes.
- Confirm: Wait for a breakout/breakdown with volume.
- Stop-loss: Place stops beyond invalidation levels.
- Target: Project a minimum target based on pattern height.
Trend Changes
Reversal Patterns
Patterns that signal a potential trend change from bullish to bearish or vice versa.
Classic bearish reversal after an uptrend.
Bullish reversal after a downtrend.
Price fails twice at resistance → bearish.
Price holds support twice → bullish.
Three failures at resistance → stronger bearish signal.
Three tests of support → stronger bullish reversal.
Slow distribution → trend exhaustion.
Accumulation → slow trend change to bullish.
Often bullish when it forms in a downtrend.
Often bearish when it forms in an uptrend.
Trend Pauses
Continuation Patterns
Patterns that suggest the trend will resume after a period of consolidation.
Bullish continuation pattern.
Bearish continuation pattern.
Brief consolidation before bullish continuation.
Brief consolidation before bearish continuation.
Bullish continuation with flat resistance and rising support.
Bearish continuation with flat support and falling resistance.
Consolidation where price could break either way (usually with trend).
Bullish Breakout from a consolidation range.
Bearish Breakdown from a consolidation range.
Strong bullish continuation pattern (especially on higher TFs).
Key Takeaways
- ✓Patterns work best on higher timeframes (H4, D1).
- ✓Always wait for confirmation before entering.
- ✓Volume confirmation strengthens reliability.
- ✓Use proper risk management (1-2% per trade).