1) Head and Shoulders
The Head and Shoulders pattern is considered to be one of the most reliable reversal patterns. It has three peaks: the first is the left shoulder, the second (higher peak) is the head, and the third is the right shoulder.
When the price breaks below the line connecting the bottoms of the two shoulders, it signals a potential trend reversal, which is considered a classic signal to go short.
2) Double Top
The Double Top is a bearish reversal pattern that occurs when an asset’s price reaches a resistance level (the top), falls, then returns to that same resistance level but fails to break through.
When the price fails to break above the resistance on the second attempt, it indicates a lack of buying power, and the price is likely to drop. A short position can be considered after the price falls below the support.
3) Bearish Flags and Pennants
These are continuation patterns that form after a strong downtrend. The price consolidates in a small rectangle or triangle (the flag or pennant) before continuing in the same direction.
After a steep decline (the flagpole), the price consolidates in a small range (the flag or pennant). When the price breaks below the consolidation pattern, it often signals the continuation of the downtrend, making it a good time to short the asset.
4) Descending Triangle
A Descending Triangle is a bearish continuation pattern formed by a horizontal support line and a downward-sloping resistance line. The price creates lower highs as it squeezes against the support level.
When the price breaks below this support, it signals strong selling pressure and a likely continuation of the downtrend — a key entry point for short sellers.
