LIST OF CHART PATTERNS

If the head and shoulders appears, double/triple top/bottom, then a change in the current trend or a serious price correction might happen. Such patterns often are formed at historical highs or at strong levels of support/resistance.

Head and shoulders pattern consists of the three tops. Middle (head) – is the most high, tops at the edges are (shoulders) they are at the same level. Entry to the position is possible if breakout is happening in the retest of the line of breakout. If the trend is descending, then the pattern would be symmetrical.

This pattern consists of two/three tops or bottoms that have stopped on the same level. The price is returned to the last minimum or maximum, after which the minimum/maximum is reversed in the other direction.

Double top is the same as a triple top. The main difference is that the support line breakout after the second peak(top). Traders look for entry points after level breakout or retesting.

After finishing the figure of trend’s continuation, it is most likely that the price moves in the same direction. The main patterns of continuation of the trend are pennant, flag and rectangle patterns.

Rectangle pattern (range, flat, consolidation) on the chart is formed from horizontal support and resistance lines. The ticker falls into the flat after strong price impulses. The longer the price is in the range, the higher the probability of breaking the lines of flat.

The lines of the flag pattern are directed against the main trend. Usually, the pattern appears after strong price movements. The flag pattern may indicate that the bears have taken the correction for a reversal. It is possible to break through the channel lines and continue the trend in the same direction. Traders open a position after the flag line breakout in the direction of the main trend.

The price rises in the bullish flag pattern, then it consolidates in a narrow range. The mins. and max. of the correction are located between the lines of the pattern. If the upper limit of the bullish flag is broken, the continuation of the main trend is most likely.

The bear flag pattern is characterized by a price descending. After that, the price consolidates and continues to move in a narrow range. If the lower line of the bearish flag is broken, the continuation of the downtrend is most likely.

A pennant pattern is formed in a similar way to a triangle. The main difference is that the upper line of the pennant is directed down, the lower one is moving up. Usually, the pattern appears after strong impulse movements towards the main trend.

The bullish pennant looks like a symmetrical triangle. Generally, the current bullish trend continues with a bullish pennant. After breaking out the upper line of the pennant, a price movement equal to the range of the pennant is possible.

Bearish pennant is a symmetry of a bullish pattern. The pattern appears after a strong price fall and ends with the appearance of a triangle in the form of a pennant. Usually, a bearish pennant continues a bearish trend.

Undefined patterns can inform the trader about continuation of the trend or the reversal. The price direction depends on the slope of the pattern lines in relation to the current trend.

A triangle is usually formed when the top and the lines of the price move towards each other (like the sides of a triangle). Generally, the pattern is attributed to the trend continuation pattern. A trend reversal is possible with a triangle, in fact.

The ascending triangle has a horizontal resistance line. The lows are fixed higher, the price range becomes narrower with each wave. Usually, to enter a long position, traders take into account the fact of a breakout of the resistance line or a pullback to it.

One side of the pattern is formed by horizontal support in the case of a descending triangle, the second side by decreasing highs. A descending triangle is the complete opposite of an ascending one. Using this pattern, traders are looking for entry points after a breakdown of support or a pullback to it.

The symmetrical triangle shows a situation where the price tops are lower and the price bottoms are higher. Both sides of the triangle have the same angle of slope. Using this pattern, it is extremely difficult to determine the price movement. A breakout can trigger a price movement equal to the size of the pattern.

The trader can observe a bearish or bullish wedge if there is an uptrend. Unlike triangles, wedges do not have a flat side. Both sides are tilted in the same direction.

If there is a bullish (descending) wedge, then the local lows are updated. At the same time, the price in the range slows down. Therefore, on a growing trend, a bullish wedge looks like a small correction. The highs and lows of the wedge are approaching. Usually, traders open short positions after the breakout of the upper limit of the bullish wedge.

A bearish (ascending) wedge is formed similarly to a bullish one. The difference is that local maxima are updated. The price slows down in a decreasing range. With a bearish wedge, a trend reversal or a subsequent correction is possible.

Patterns help the trader to predict the development of the market and ticker price changes. Technical analysis patterns do not guarantee the development of the market in the n-direction. Nevertheless, technical analysis is applied in trade as well as fundamental, since it gives the trader a better understanding of the market.