This is a trading cheat sheet that categorizes different candlestick chart patterns into three groups: Reversal, Continuation, and Bilateral Patterns. These patterns help traders analyze market trends and make informed trading decisions.
1. Reversal Chart Patterns (Indicate a trend reversal)
Double Top (Bearish) → Two peaks at resistance, break below neckline confirms downtrend.
Head & Shoulders (Bearish) → Three peaks, break below neckline signals trend change.
Rising Wedge (Bearish) → Upward narrowing channel, breaks downward.
Double Bottom (Bullish) → Two troughs at support, break above neckline confirms uptrend.
Inverse Head & Shoulders (Bullish) → Three troughs, break above neckline signals trend change.
Falling Wedge (Bullish) → Downward narrowing channel, breaks upward.
2. Continuation Chart Patterns (Confirm existing trend will continue)
Falling Wedge (Bullish) → Breaks upward, continuing the trend.
Bullish Rectangle → Horizontal consolidation, breaks upward.
Bullish Pennant → Small symmetrical triangle after uptrend, breaks upward.
Rising Wedge (Bearish) → Breaks downward, continuing the trend.
Bearish Rectangle → Horizontal consolidation, breaks downward.
Bearish Pennant → Small symmetrical triangle after downtrend, breaks downward.
3. Bilateral Chart Patterns (Price can break out in any direction)
Ascending Triangle → Rising lows, horizontal resistance, breakout depends on momentum.
Descending Triangle → Falling highs, horizontal support, breakout depends on market conditions.
Symmetrical Triangle → Converging trendlines, breakout in either direction.
Key Takeaways:
Reversal patterns → Trend is changing.
Continuation patterns → Trend will continue.
Bilateral patterns → Uncertainty, breakout in either direction.
Why is this useful?
Helps traders identify trends and make better trading decisions.
Provides entry & exit points for risk management.
Improves accuracy in technical analysis.
If you’re into trading, understanding these patterns can help reduce losses and improve profitability.