Understanding chart patterns can be the difference between consistent profits and costly mistakes. Here are 8 essential candle formations and technical setups every trader should know — whether you're just starting or refining your edge.
✅ 1. Double Bottom — Bullish Reversal
This pattern appears after a prolonged downtrend, featuring two nearly identical lows. A breakout above the neckline signals a potential trend reversal to the upside.
❌ 2. Double Top — Bearish Reversal
The opposite of the Double Bottom. After a strong uptrend, this pattern shows two equal highs, followed by a breakdown below the neckline — often a signal of downward momentum ahead.
📐 3. Gann Fans — Bullish Continuation Tool
This geometric indicator uses angled trend lines to forecast key support/resistance zones. A bounce from the lower fan angle often suggests bullish strength building up.
⚠️ 4. Head and Shoulders — Classic Bearish Reversal
One of the most reliable reversal patterns. It consists of a central peak (head) between two lower peaks (shoulders). A break below the neckline usually signals a major trend change to the downside.
🚀 5. Inverted Head and Shoulders — Bullish Reversal
The mirror image of the above. Seen after a downtrend, this pattern points to buyer accumulation. A neckline breakout often leads to a strong upward move.
🏆 6. Triple Bottom — Powerful Bullish Signal
Formed by three equal lows at a strong support level. When price breaks above the neckline, it indicates sustained buying pressure and a potential rally.
📉 7. Triple Top — Strong Bearish Signal
This formation shows three equal highs that create resistance. A breakdown below the neckline suggests weakening momentum and often precedes a downward trend.
🔄 8. Resistance Becomes Support — Continuation Signal
When a price breaks through a resistance level and successfully retests it as support, it confirms bullish momentum and can act as a launchpad for further gains.
🖼️ Visual Reference Included Below 👇
💡 Pro Tip: Always confirm these patterns with volume and other indicators for stronger signals.
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