This image shows various types of chart patterns used in technical analysis for trading. Let me explain them in simple terms:

Reversal Chart Patterns (Signal trend changes)

  1. Double Bottom (W-shaped):

    • Bullish reversal pattern after downtrend

    • Entry: When price breaks above middle peak

    • Stop: Below the lowest point

    • Target: Height of pattern projected upward

  2. Inverse Head & Shoulders:

    • Bullish reversal (left shoulder, lower head, right shoulder)

    • Entry: Break above neckline

    • Stop: Below head's low

    • Target: Head to neckline distance projected up

  3. Falling Wedge:

    • Bullish reversal (price makes lower highs/lows but converging)

    • Entry: Break above upper trendline

    • Stop: Below pattern

    • Target: Height of wedge base projected up

  4. Double Top (M-shaped):

    • Bearish reversal after uptrend

    • Entry: When price breaks below middle trough

    • Stop: Above highest point

    • Target: Height of pattern projected downward

  5. Head & Shoulders:

    • Bearish reversal (left shoulder, higher head, right shoulder)

    • Entry: Break below neckline

    • Stop: Above head's high

    • Target: Head to neckline distance projected down

  6. Rising Wedge:

    • Bearish reversal (price makes higher highs/lows but converging)

    • Entry: Break below lower trendline

    • Stop: Above pattern

    • Target: Height of wedge base projected down

Continuation Patterns (Trend pauses then continues)

  1. Bullish Flag/Pennant/Rectangle:

    • Brief consolidation in uptrend

    • Entry: Break above pattern

    • Stop: Below pattern

    • Target: Height of prior move projected up

  2. Bearish Flag/Pennant/Rectangle:

    • Brief consolidation in downtrend

    • Entry: Break below pattern

    • Stop: Above pattern

    • Target: Height of prior move projected down

Neutral Patterns (Can break either way)

  1. Ascending Triangle:

    • Flat top, rising bottoms

    • Typically bullish break above resistance

  2. Descending Triangle:

    • Flat bottom, lowering tops

    • Typically bearish break below support

  3. Symmetrical Triangle:

    • Converging highs and lows

    • Break direction determines trend

Key points:

  • Entry: Where to enter the trade

  • Stop: Where to place stop-loss

  • Target: Where to take profits

  • Patterns work best with volume confirmation

  • Always use stop-losses as patterns can fail.