1. Analyzing Chart Patterns: Introduction
  2. Analyzing Chart Patterns: Why Charts?
  3. Analyzing Chart Patterns: Head And Shoulders
  4. Analyzing Chart Patterns: Cup And Handle
  5. Analyzing Chart Patterns: Double Top And Double Bottom
  6. Analyzing Chart Patterns: Triangles
  7. Analyzing Chart Patterns: Flags And Pennants
  8. Analyzing Chart Patterns: The Wedge
  9. Analyzing Chart Patterns: Gaps
  10. Analyzing Chart Patterns: Triple Tops And Bottoms
  11. Analyzing Chart Patterns: Round Bottoms
  12. Analyzing Chart Patterns: Conclusion


By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com

This introduction to chart patterns has provided a broad overview of chart pattern analysis and several of the largest patterns.

Here's a brief summary of what we've covered:

  • Chart analysis is the technique of using patterns formed on a securities chart to formulate buy and sell signals.
  • There are two types of chart patterns: reversal and continuation.
  • A continuation pattern suggests that the prior trend will continue upon completion of the pattern.
  • A reversal pattern suggests that the prior trend will reverse upon completion of the pattern.
  • A head-and-shoulders top suggests a reversal in the prior uptrend.
  • An inverse head and shoulders suggests a reversal in the prior downtrend.
  • A cup-and-handle pattern is a bullish continuation pattern that suggests a continuation of the prior uptrend.
  • A double top is a bearish reversal pattern, which suggests that the preceding up trend will reverse after confirmation of the pattern.
  • A double bottom is a bullish reversal pattern, which suggests that the prior downtrend will reverse.
  • There are three main types of triangle patterns - symmetrical, descending and ascending, which are constructed by converging trendlines.
  • A symmetrical triangle, which is formed when two similarly sloped trendlines converge, typically suggests a continuation of the prior trend.
  • A descending triangle, which is formed when a downward sloping trendline converges towards a horizontal support line, suggests a downward trend after completion of the pattern.
  • An ascending triangle, which is formed when an upward sloping trendline converges towards a horizontal resistance line, suggests an uptrend after completion of the pattern.
  • Flags and pennants are continuation patterns formed after a sharp price movement. The move consolidates, forming a flag shape or pennant share, and suggests another strong move in the same direction of the prior move upon completion.
  • A wedge chart pattern suggests a reversal in the prior trend when the price action moves outside of the converging trend lines in the opposite direction of the prior trend.
  • A gap is formed on a chart when there is an empty space between two time periods. Common gap patterns include: common, breakaway, runaway (measuring) and exhaustion.
  • A triple top is a reversal pattern formed when a security attempts to move past a level of resistance three times and fails. Upon failure of the third attempt the trend is thought to reverse and move in a downward trend.
  • A triple bottom is a reversal pattern formed when a security attempts to move below an area of support three times but fails to do so. Upon failure of the third attempt below resistance the trend is thought to reverse and move upward.
  • A rounding bottom is a long-term reversal pattern that signals a shift from a downward trend to an upward trend.

Related Articles
  1. Trading

    Analyzing Chart Patterns: Double Top And Double Bottom

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The double top and double bottom are another pair of well-known chart patterns whose names don't leave much to the imagination. ...
  2. Trading

    Analyzing Chart Patterns: Triangles

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com As you may have noticed, chart pattern names don't leave much to the imagination. This is no different for the triangle ...
  3. Trading

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  4. Trading

    Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.
  5. Trading

    Analyzing Chart Patterns: Round Bottoms

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com A rounding bottom, also referred to as a saucer bottom, is a long-term reversal pattern that signals a shift from a downtrend ...
  6. Trading

    Analyzing Chart Patterns: Why Charts?

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com Before the advent of computers and data feeds, the use of charts to formulate trading strategies was outside the mainstream ...
  7. Trading

    Analyzing Chart Patterns: Triple Tops And Bottoms

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The triple top and triple bottom are reversal patterns that are formulated when a security attempts to move past a key level ...
  8. Trading

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  9. Trading

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  10. Trading

    Most Commonly Used Forex Chart Patterns

    These chart patterns provide entries, stops and profit targets that can be easily seen.
Trading Center