If you're serious about improving your trading game, you must understand chart patterns. These formations reveal potential moves before they happen. Let’s break them down into 3 main types: Reversal, Continuation, and Bilateral patterns.
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🔄 Reversal Patterns – Indicate a potential trend shift
These patterns signal that a trend might be coming to an end and a new direction could be starting.
1️⃣ Double Top – Bearish signal where price hits the same resistance twice before dropping.
2️⃣ Head & Shoulders – A triple-peak pattern (shoulder-head-shoulder) that marks a bearish reversal after the neckline breaks.
3️⃣ Rising Wedge – A narrowing upward channel that often breaks to the downside.
4️⃣ Double Bottom – Bullish setup showing price bouncing twice from the same support zone before heading up.
5️⃣ Inverse Head & Shoulders – The upside-down version of the previous pattern; it signals bullish reversal.
6️⃣ Falling Wedge – A bullish pattern forming during a downtrend, often leading to a breakout higher.
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🔁 Continuation Patterns – Signal trend persistence
These suggest that the current trend will likely resume after a brief consolidation.
1️⃣ Falling Wedge – In an uptrend, this pattern often signals bullish continuation.
2️⃣ Bullish Rectangle – Price moves sideways within a tight range before breaking upward.
3️⃣ Bullish Pennant – Forms after a strong price spike; a short pause before continuation.
4️⃣ Rising Wedge – In a downtrend, this pattern may break downward.
5️⃣ Bearish Rectangle – Sideways range during a downtrend that usually breaks lower.
6️⃣ Bearish Pennant – Appears after a sharp drop, indicating potential further decline.
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🔀 Bilateral Patterns – Breakout could go either way
These patterns are neutral and depend on market momentum.
1️⃣ Ascending Triangle – Rising support meets flat resistance; can break up or down.
2️⃣ Descending Triangle – Lower highs and solid support; watch for breakout direction.
3️⃣ Symmetrical Triangle – A balanced squeeze between bulls and bears; breakout possible in either direction.
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💡 Trader’s Cheat Sheet:
✅ Reversal = Possible trend change
✅ Continuation = Trend remains strong
✅ Bilateral = Uncertain move – trade the breakout!
Mastering these patterns helps you:
Spot quality entry points
Set smarter stop-losses
Define solid profit targets
React confidently to price action
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