Unlock the power of chart patterns to forecast market moves and elevate your trading game. Here’s a simplified guide to the three essential pattern types: Reversal, Continuation, and Bilateral.
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🔄 Reversal Patterns – Signal a change in trend direction
1️⃣ Double Top – Bearish pattern with two peaks at resistance, followed by a downside break.
2️⃣ Head & Shoulders – Classic bearish setup with three peaks; breakdown below the neckline confirms reversal.
3️⃣ Rising Wedge – Upward-sloping, tightening structure that often breaks bearish.
4️⃣ Double Bottom – Bullish mirror of the double top, featuring two lows at support before an upward breakout.
5️⃣ Inverse Head & Shoulders – Bullish reversal with three troughs; breakout above neckline confirms trend shift.
6️⃣ Falling Wedge – Downward-sloping, tightening pattern that usually breaks bullish.
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🔁 Continuation Patterns – Suggest the existing trend will continue
1️⃣ Falling Wedge – Also appears as a bullish continuation, signaling a breakout after consolidation.
2️⃣ Bullish Rectangle – Sideways range during an uptrend, typically followed by a breakout higher.
3️⃣ Bullish Pennant – Short-term consolidation after a rally, leading to further gains.
4️⃣ Rising Wedge – Bearish continuation forming during a downtrend before breaking lower.
5️⃣ Bearish Rectangle – Sideways price action in a downtrend, often ending in a breakdown.
6️⃣ Bearish Pennant – Small consolidation post-drop, signaling another leg down.
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🔀 Bilateral Patterns – Breakout can occur in either direction
1️⃣ Ascending Triangle – Flat resistance with rising lows; breakout can be bullish or bearish.
2️⃣ Descending Triangle – Flat support with falling highs; watch for breakouts either way.
3️⃣ Symmetrical Triangle – Converging trendlines with no clear bias; breakout direction depends on momentum.
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📌 Trader Takeaways:
✅ Reversal Patterns = Trend change likely.
✅ Continuation Patterns = Trend is likely to persist.
✅ Bilateral Patterns = Outcome is uncertain—prepare for either scenario.
Mastering these setups can drastically improve your entries, stop-loss placements, and profit targets!
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