🧠 Article 5:
Chart Patterns – Part 1: Reversal Patterns
(From "Technical Analysis of the Financial Markets" by John Murphy)
Reversal patterns signal a potential change in the current trend. John Murphy considers them visual clues that mark the beginning of a new bullish or bearish phase.
🔹 1. Head and Shoulders:
Appears after an uptrend.
Break below the neckline confirms a trend reversal.
The inverse head and shoulders appears at the bottom of a downtrend and signals a potential bullish reversal.
🔹 2. Double Top/Bottom:
Double top = bearish signal.
Double bottom = bullish signal.
The pattern is confirmed when the neckline is broken with strong volume.
🔹 3. Triple Top/Bottom:
Less common but more reliable.
Same concept as the double top/bottom but with three peaks or troughs.
✅ Murphy emphasizes that traders shouldn’t rely on the pattern alone—confirmation with volume and breakout is key to trust the reversal.
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🔍 This is information, not financial advice. Always think for yourself and manage risk wisely.
