What are Chart Patterns?

Chart patterns are specific formations that appear in price charts, created by price movements over time. These patterns tend to repeat and can indicate potential future price movements, making them valuable tools for technical analysis and trading decisions.

Common Patterns

Continuation Patterns

• Flags and pennants
• Triangles (ascending, descending, symmetric)
• Rectangle patterns
• Wedges
• Cup and handle

Reversal Patterns

• Head and shoulders
• Double/triple tops and bottoms
• Diamond tops and bottoms
• Rounding patterns
• V-bottoms/tops

Pattern Analysis

Key Elements

• Pattern formation time
• Volume confirmation
• Support/resistance levels
• Price momentum
• Breakout points

Trading Applications

• Entry point identification
• Stop loss placement
• Target setting
• Risk assessment
• Trend confirmation

Related Terms

• Technical Analysis
• Price Action
• Market Structure
• Support and Resistance