1. Bullish chart patterns (indicate a potential price increase)
These patterns indicate a higher likelihood of a bullish trend after formation.
Inverted head and shoulders – a reversal pattern indicating a shift from a downtrend to an uptrend.
Double bottom – a 'W' shaped pattern that shows strong support and a potential bullish reversal.
Bullish flag - a consolidation pattern with a slight downward tilt, often leading to an upward breakout.
Triple bottom – a pattern with three equal bottoms, indicating strong support and a trend reversal.
Cup and handle – a rounded bottom with a small dip (handle), often indicating an upward breakout.
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2. Undefined chart patterns (can break in any direction)
These patterns require confirmation as they do not guarantee a specific movement.
Symmetrical triangle - a neutral pattern where the price converges, with potential breakout in either direction.
Narrow descending wedge – typically a bullish pattern, but requires confirmation of the breakout.
Narrow ascending wedge - typically bearish, but can also break upward in rare cases.
Descending triangle - typically bearish but can break upward if there is strong buying pressure.
Ascending triangle - typically bullish but may collapse if sellers dominate.
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3. Bearish chart patterns (indicate a potential price decline)
These patterns indicate a bearish trend after formation.
Head and shoulders – a reversal pattern indicating a transition from an uptrend to a downtrend.
Triple top – a pattern with three equal tops, indicating strong resistance and a potential decline.
Double top – an 'M' shaped pattern that shows resistance and a bearish reversal.
Bearish flag – a consolidation pattern with an upward tilt, often leading to a downward breakout.
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Key points:
Bullish patterns indicate buying opportunities.
Bearish patterns indicate potential selling pressure.
Undefined patterns require confirmation before making trading decisions.
