If you want to make real profits in trading, you must understand chart patterns. These patterns are used by smart traders to predict the next price move. Learning them can help you buy low, sell high, and avoid common mistakes. By following these patterns, you can trade with more confidence instead of guessing.
There are two main types of patterns you should know: Reversal Patterns and Continuation Patterns.
1. Reversal Patterns
Reversal patterns tell you when the current trend is about to change direction. If the market is going up, a reversal pattern may signal that a drop is coming. If it’s going down, the pattern may show that a rise is near.
Double Top and Triple Top: These patterns suggest that the price is too high and may fall soon.
Double Bottom and Triple Bottom: These are signals that the price has found strong support and may rise from here.
Head and Shoulders / Inverted Head and Shoulders: Classic patterns that indicate a strong trend reversal either to the downside or upside.
Rising Wedge and Falling Wedge: These patterns show weakness in the current trend and suggest a reversal is near.
2. Continuation Patterns
Continuation patterns show that the current trend will likely continue after a small pause. This is where you can add to your positions or join the trend safely.
Bullish and Bearish Flags: These small pauses in the market often lead to the trend continuing in the same direction.
Pennant Patterns: Short-term consolidation before the market breaks out again.
Triangles (Symmetrical, Ascending, Descending): These patterns form when the price is getting ready for the next big move.
Expanding Triangles: A sign of high volatility where prices can break sharply in the trend direction.
Final Thoughts
By mastering these patterns, you can enter the market with a clear plan. It helps you avoid random trades and increases your chances of success. Study the chart, wait for these patterns to form, and then act. This strategy can help you fill your empty bags with profits — slowly but surely.
Stay patient, stay disciplined, and trade smart!