Chart patterns are your secret weapon for reading market psychology and predicting price action like a pro. Mastering them means you can enter smarter, exit cleaner, and avoid costly traps. Let’s dive into the 3 key pattern types every trader must know: Reversal, Continuation, and Bilateral Patterns.
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🔁 REVERSAL PATTERNS – Time to Flip the Script
These patterns hint that the current trend is losing steam and about to reverse direction.
1️⃣ Double Top – Bearish signal with two equal highs; break below support confirms downtrend.
2️⃣ Head & Shoulders – Classic trend-reversal signal; three peaks, neckline break = sell signal.
3️⃣ Rising Wedge – Upward squeeze with weak momentum; often ends in a bearish drop.
4️⃣ Double Bottom – Bullish twin troughs; breakout means trend reversal to the upside.
5️⃣ Inverse Head & Shoulders – Bullish mirror of the H&S pattern, perfect for spotting reversals upward.
6️⃣ Falling Wedge – Downward squeeze with shrinking volume; often pops bullish.
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⏩ CONTINUATION PATTERNS – Trends That Don’t Quit
These suggest that the dominant trend is simply taking a breather before charging on.
1️⃣ Falling Wedge – In an uptrend? This pattern confirms the next leg upward.
2️⃣ Bullish Rectangle – Range-bound movement before bulls break higher.
3️⃣ Bullish Pennant – Tiny consolidation post-pump; breakout means continuation.
4️⃣ Rising Wedge – In a downtrend, this pattern leads to further downside.
5️⃣ Bearish Rectangle – Price stalls in a range before heading lower.
6️⃣ Bearish Pennant – Small pause after a drop, followed by another leg down.
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⚖️ BILATERAL PATTERNS – Breakouts Loading... But Which Way?
These patterns are like coiled springs — directionless until a breakout occurs.
1️⃣ Ascending Triangle – Higher lows meet resistance; breakout could go either way.
2️⃣ Descending Triangle – Lower highs squeeze toward support; watch for the breakout.
3️⃣ Symmetrical Triangle – Equal pressure from bulls & bears; breakout is imminent.
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Pro Trader Tips:
Reversal = Trend change
Continuation = Trend strength
Bilateral = Wait and watch
Master these setups to optimize entries, stop-losses, and targets like a real market sniper.
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