The image displays 8 common chart patterns known as 'reversal patterns'. These patterns typically appear when a market trend (e.g., prices were rising) is about to change direction (e.g., prices start falling). Traders use these patterns to identify potential shifts in market trends.
Each pattern shown here usually follows an uptrend and indicates that prices are likely to go down.
📌Ascending Wedge: Price rises within converging lines, but buying pressure weakens. A breakdown below the lower line signals a potential decline.
📌Rounding Top: Price gradually forms a rounded peak, then starts to decline. A break below the support line of this rounded formation confirms a downtrend.
📌Inverted Cup & Handle: This pattern looks like an inverted cup followed by a smaller, shorter "handle." A break below the support line of both the cup and handle indicates a price fall.
📌 'M' Pattern (Double Top): Price reaches a high, pulls back, then rallies to a similar high again. It looks like the letter 'M'. A break below the neckline (the low point between the two peaks) confirms a downtrend.
*📌Rectangle: Price consolidates within a defined horizontal range. A break below the lower support line suggests a potential reversal to a downtrend.
*📌Head & Shoulder: This classic pattern has three peaks: a central, highest peak ("Head") flanked by two lower peaks ("Shoulders"). A break below the neckline (connecting the lows between the shoulders and head) signals a bearish reversal.
These patterns help traders make decisions on when to enter or exit trades. However, remember they are only potential signals and not guarantees. They should be used in conjunction with other analyses and risk management strategies.