Chart patterns form over multiple bars and represent structural price action setups.
SVG diagrams show the approximate price shape. Click "Learn more" for detailed examples.
Pattern validity improves with higher timeframes and volume confirmation on breakout.
Price rallies to a resistance level, pulls back, then rallies again to the same resistance โ but fails to break through. The two peaks are at roughly the same price. A break below the neckline (the pullback low) confirms the pattern.
๐ Two peaks at same resistance โ neckline break = entry
Learn more on Investopedia โ Price declines to a support level, bounces, declines again to the same support โ then bounces again. Two troughs at roughly the same price. A break above the neckline (the bounce high) confirms the bullish reversal.
๐ Two troughs at same support โ neckline break = entry
Learn more on Investopedia โ Price forms a U-shaped 'cup' over weeks to months as it declines then recovers to the prior high. A small pullback/consolidation ('handle') forms just below resistance. A breakout above the handle on volume confirms the pattern.
๐ U-shaped base โ small handle consolidation โ breakout
Learn more on Investopedia โ Three peaks with the middle peak (head) higher than the two outer peaks (shoulders). A neckline connects the two troughs. Breaking below the neckline signals a bearish trend reversal. Target = neckline โ head height.
๐ Left shoulder โ higher head โ right shoulder โ neckline break
Learn more on Investopedia โ Three troughs with the middle trough (head) lower than the two outer troughs (shoulders). Breaking above the neckline confirms a bullish reversal. Target = neckline + head depth.
๐ Left shoulder โ lower head โ right shoulder โ neckline break
Learn more on Investopedia โ A flat resistance line (sellers repeatedly defend the same price) combined with a rising support line (buyers making higher lows). Price coils toward the apex. A breakout above resistance on volume is typically bullish.
๐ Flat top resistance + rising lows โ upside breakout
Learn more on Investopedia โ A flat support line (buyers defend the same price) combined with declining resistance (sellers making lower highs). A breakdown below support on volume is typically bearish.
๐ Flat bottom support + declining highs โ downside breakdown
Learn more on Investopedia โ Both support (higher lows) and resistance (lower highs) converge toward the apex. The breakout direction often follows the prior trend. Considered a continuation pattern โ watch the breakout direction for the trade.
๐ Converging trendlines โ breakout in prior trend direction
Learn more on Investopedia โ After a sharp upward move (the flagpole), price consolidates in a slight downward channel (the flag). A breakout above the upper channel line resumes the uptrend. Target = flagpole length added to breakout point.
๐ Sharp uptrend โ brief downward channel โ upside breakout
Learn more on Investopedia โ After a sharp downward move (flagpole), price consolidates in a slight upward channel (the flag). A breakdown below the lower channel line resumes the downtrend.
๐ Sharp downtrend โ brief upward channel โ downside breakdown
Learn more on Investopedia โ Similar to a flag but the consolidation forms a small symmetrical triangle (converging trendlines) rather than a channel. Follows a sharp price move (the pole). The breakout typically continues in the prior trend direction.
๐ Sharp move โ converging consolidation โ continuation breakout
Learn more on Investopedia โ Both support and resistance slope upward but converge โ the range narrows as price rises. Despite the rising price, momentum weakens. A breakdown below support (often on increased volume) is bearish.
๐ Converging rising trendlines โ bearish breakdown
Learn more on Investopedia โ Both support and resistance slope downward and converge โ range narrows as price falls. Momentum weakens on the downside. A breakout above resistance is bullish and often sharp.
๐ Converging falling trendlines โ bullish breakout
Learn more on Investopedia โ
โ ๏ธ Chart patterns are best used alongside volume analysis and indicator confluence.
False breakouts are common โ always use a stop loss. For educational purposes only.