Forex

19 Chart patterns PDF guide

In this post, you will read about the twenty-four chart patterns. Retailers use these chart patterns to forecast the price in technical analysis of the trades. This post will provide you with a brief description of each design. In other words, after reading this post, you have clearly understood the chart patterns. The best part is that you’ll get a link to the pdf of chart patterns at the end of this post.

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What do chart patterns mean?

Chart patterns are considered one of the basic patterns use as natural price patterns. We call chart patterns natural price patterns because they resemble the shape of most natural objects. For example, you can see triangle patterns and wedge patterns.

Traders have used these patterns for market forecasting and predictions. But the question that comes into our mind is how chart patterns are made. The answer is simple enough chart patterns of swings and price waves on the candlestick chart. It’s an entirely natural phenomenon. That’s why these patterns repeat most of the time.

Types of chart patterns

The trends decide chart patterns, and according to the trend direction, chart patterns are divided into two categories. Here are two main types of chart patterns.

  • Bullish chart patterns
  • Bearish chart patterns

These chart patterns are divided into many other chart patterns. But they’re on the base of market structure and due to shape.

Call to action

Top 19 chart patterns that are included in the list:

Traders can use so many ways in the technical analysis operation. But in the guide, I will briefly describe traders’ 24 most commonly used chart patterns. In other words, we’ve shortlisted those patterns with massive winning possibilities in the long run.

1- Double top pattern

Double-top patterns are one of the most significant bearish reversal chart patterns. The double complete design is shaped after an asset reaches a high price two times consecutively and has a line between the two highs. The bar is called the neckline and is drawn on the last swing after two tops.

In other words, the prior trend to the double pattern is always bullish and shaped at the end of the same direction. One critical point about this pattern is that pattern is changed from bullish to bearish.

Double top pattern

2- Double bottom pattern

Double bottom is a bullish reversal chart pattern used as a stock chart formation. Most of the time, double bottom design is used in technical analysis and for the execution of profitable trades. It also shows the construction of two lows at the same time by going through from the support zone.

Most of the time, the primary job of this pattern is to provide signals about price reversal. Similarly, a bearish trend reversal formed after the neckline breakout. But the procedure of drawing the neckline is different, which is marked by the lowest swings low of the top; in this chart pattern, the trend changes from bearish to bullish.

Double bottom pattern

3- Triple top pattern

The triple top is a bearish reversal chart pattern. This pattern depends on the stock chart patterns and is widely used in technical analysis. The price is formed in three tops at the same level of resistance. The neckline formed after the connection of the last two swings of lows, along with a  trend line in the pattern. Once the trend line breakout, it’s the confirmation call for the triple-top design.

Triple top pattern

4- Triple bottom pattern

The triple-ply bottom pattern is one of the most common bullish reversal patterns used in technical analysis. In this pattern, the price formed consecutively in the three bases at the same support level. Three consecutive swings of lows shape the characterization consecutively bottom; similarly, the neckline form after the connection of two swings high with a trend line in the triple bottom pattern. Once the breakout is confirmed, trend reversal shapes from bearish to bullish.

If you want to learn how to trade this pattern, you’ve to be aware of price terms and Impulsive waves.

Triple bottom pattern

5- Head and shoulder pattern

The head and shoulder are a reversal chart pattern containing the three price swings. In other words, the head is the highest-priced swing, but the other two waves, right and left, are considered the shoulders. That’s why this pattern is famous by the name head and shoulder.

On the other hand, the market reversed the bearish trend after forming this chart pattern. It’s a bullish trend reversal pattern, and when t is compared with the inverse, head, and shoulder designs are opposite. A neckline also forms in this pattern, confirming trend reversal.

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6- Cup and handle chart pattern

This pattern is a technical indicator on the security price chart resembling a cup and the handle. The cup& handle pattern is a continuation chart pattern shaped price from the round bottom and handles shape on the left. The primary purpose of this chart pattern is to reverse a trend.

On the other hand, cup& handle patterns act as trend pattern that isn’t dependent on whether it occurs as bullish or bearish. But the main dependency of this pattern is a location that decides. One important thing that everybody needs to remember is the primary difference between round bottom waves and V-shaped waves.

You can also back-test this pattern because rounded bottoms form in only a few cases. This pattern is used mainly by trade because it represents the stop& buys signal.

 

Cup and handle chart pattern

7- Three drives chart pattern

Three drives chart pattern is another significant pattern used in the technical analysis. In other words, three drive patterns are irregular patterns shaped by three consecutive symmetrical moves. Three drive patterns have two ABCD patterns. It also divides into two types.

  • Bearish three drives
  • Bullish three drives

In this three-drive pattern, you’ll find three impulsive waves and two retracement waves. On the other hand, the number of driving habits is considered valuable for traders in trading. If you want to trade this pattern, you can apply the same method used for the ABCD pattern for effective trading.

drives chart pattern

 

8- Pennant chart pattern

The pennant chart pattern is another pattern that traders use in technical analysis. It’s a continuation chart pattern along with five ABCDE waves. The primary purpose of this trend is to show the trend continuation after a minor way in that direction. This pennant chart pattern includes two impulsive waves and three retracement waves.

The mOn the other hand, this pattern has two types. The Market consolidated inwards at the retracement wave, dates indecision in the market. In short, the trend continues whenever the price breaks in the direction at that time. This pattern is also shaped whenever small inward consolidations are merged along with sudden movement.

  • Bullish pennant pattern
  • Bearish pennant pattern

Pennant chart pattern

9- Wedge chart pattern

A wedge pattern is also a trend reversal pattern in which two lines converge. The inner portion is smaller, and the outer part is more comprehensive. This pattern is also used to showcase the natural behavior of the price. That’s why we also call a wedge chart a natural pattern.

It also contains the two trend lines, which we call the upper and lower trend lines. Similarly, more than three waves are formed inside the trend line. Whenever the wave size decreases with time, trend reversal works according to the following trend line breakout.

This pattern is further divided into the two types

  • Falling wedge pattern
  • Rising wedge pattern

The wedge part pattern rises whenever the bearish trend reversal occurs, and the wedge pattern represents a bullish trend reversal in the market.

 

Pennant chart pattern

10- Diagram diamond chart

A Diagram diamond chart is the first pattern among all, which is continuation and reversal simultaneously. In this pattern, the price forms the shape of a diamond on the chart. Location matters the most in the diagram diamond chart, which is used to decide whether it will be a trend continuation pattern or a trend reversal. The Diagram diamond chart pattern divides into two other categories or types.

  • Bullish diamond chart pattern
  • Bearish diamond chart pattern

A bearish trend reversal occurs whenever a diamond pattern is shaped on top of the trend. Once the beginning begins at the bottom of the bearish trend, a time-bullish trend reversal will form. Once this trend occurs, the tree is called a continuation trend.

Diagram diamond chart

 

11- Descending triangle pattern

Descending triangle pattern is a bearish continuation pattern. A descending upper trendline and a flat lower trendline characterize this pattern. Similarly, the price will shape like a  triangle on a horizontal base and a vertical line on the left. In other words, the price shows the signs of seller aggression more than buyers whenever the price makes lower highs.

If you are still confused about this descending triangle pattern, see the image below. A support zone forms at the bottom side of swing waves, and a bearish trend continues whenever the support zone breaks. Sometimes this pattern will act as a reversal chart pattern, but most of the time, traders use them as a bearish continuation.

 

Descending triangle pattern

12- Ascending triangle pattern

This pattern Ju, st like others, is a bullish continuation pattern. In other words, the price will form a triangle shape in case ascending triangle pattern. But one of the most important things to remember is the support zone at the bottom of the triangle pattern. On the other hand, the resistance zone is at the top.

As you have already read about the descending triangle pattern, this is the exact opposite of that pattern. The bullish trend will continue in this pattern after the complete resistance breakout. We’re discussing this pattern because the winning probability of these two patterns is high. In short ascending triangle pattern is utterly straightforward in comparison to the others.

Ascending triangle pattern

 

13- Symmetrical triangle chart pattern

Symmetrical triangle chart patterns have the same possibility of being bearish or bullish. Similarly, this pattern will act on both sides’ reversal or continuation chart patterns. In short, whenever any design gives that kind of sign, that shows the market is ready to make a decision. The inwards waves or sideways is the main direction of the price.

In other words, every wave moving towards the inward side is smaller than the previous wave. One of the main problems that come our way is identifying this pattern’s direction. In simple, for identification, we can use the breakout method. Similarly, when the design forms at that moment, two trend lines meet the lower lows and lower highs.

Most traders understand this breakout of the trend lines, showing the buyers take over the control symbol. All the information will give you a clear understanding of symmetrical chart patterns.

 

Symmetrical triangle chart pattern

14- Flag chart pattern  

The lag chart pattern contains the impulsive and retracement waves. They fewer discussing the flag chart pattern less because traders are used this pattern commonly. The lOn the other hand, this pattern is also a trend continuation pattern. In other words, this pattern is used to predict the forex market’s future.

This flag chart pattern has two different types.

  • Bearish flag pattern
  • Bullish flag pattern

When it comes to a bullish flag, it’s the combination of impulsive and retracement waves that makes a flag. On the other side, when it comes to drawing the shape of the pole at that time, retracement provides the support to outline the flag on the bar. Despite trying other methods, the bullish trend continues whenever a flag breakout happens. Nobody will predict this pattern because the flag chart pattern occurs often.

Flag chart pattern

 

15- Broadning pattern/ Megaphone pattern

First, we start this with a broadening pattern called the inverse symmetrical triangle. In this pattern, each successive wave is more significant than the previous. On the other hand, these waves shape a price structure like a megaphone on the chart.

This megaphone pattern is also used to show indecision in the market. Similarly, it shows the symbol of a significant trend reversal, which is all based on structure and location. This chart pattern is further classified into three types. Here are the name of those three types.

  1. Ascending broadening pattern
  2. Descending broadening pattern
  3. Megaphone pattern

First, the price will make lower lows and lower highs regarding the ascending broadening pattern. The second descending broadening pattern will work in the opposite direction where price-shaped higher highs and higher lows.

Call to action

16- Bump and run chart pattern

Bump and run is another very used full chart pattern containing the forex market’s two phasesket. In other words, this chart pattern is considered very advanced that helps traders to come to the end of any trend and take a step forward, to begin with, a new one. First of all, the bump phase price shoots up/down.

On the other hand, an ultra force indicates the up and down at the break of any level. In other words, once the bump phase is finished or ends, the run phase starts in the run phase price moves in the opposite direction, which moves opposite to the bump. This pattern isn’t new to the market. It has for years now.

Bump and run chart pattern

Bump and run chart patterns

 

17- Horizontal trend channel

The horizontal trend channel is considered one of the most important chart patterns. Because it shows the price movements sideways between the resistance and support zone, once that trend comes into play, it represents the sign of power or support that buyers and sellers have equal power.

Once the price channel breakout happens, it shows the predictions of the price trend. On the opposite side, the resistance zone breaks then a bullish trend forms. In short, the bearish trend occurs on one condition, which is support zone brokerage.

In this pattern, price moves in the form of swings that make the highs and lows. Most traders who are trading for the long term are aware of the other name of this pattern which is a ranging market.

 

Horizontal trend channel

18- Descending channel pattern

Descending channel pattern where price proceeds with the descending channel. On the other hand, whenever an upper trend line breakout, a bullish trend will start. In comparison with others, this channel has lower lows and lower highs.

Once you see the image, you’ll see the upper trendline meets the lower highs of swings, and the lower triangle makes the lower lows. In other words, descending channel pattern represents a bullish trend reversal. Trendlines in this pattern are parallel, as seen in the image below.

 

Horizontal trend

19- Ascending channel pattern

The bearish pattern reverses the trend where the price proceeds with higher highs and higher lows. It moves in between the parallel lines of the ascending channel pattern. The higher trendline you can see clearly in the image meets the upper and lower trendlines that meet the higher lows.

Similarly, the upper trendline acts as a resistance line, and the lower trendline acts as a support line. A bearish trend formed in this pattern because a bearish trend starts with a lower trendline. Last but one of the most significant things about this trend is that the ascending channel pattern turns the bullish price trend into a bearish one.

 

Horizontal trend channels

Final thoughts

Chart patterns are not often used by everyone who knows nothing about it. But the most often used by retailers for forecasting the market. Chart patterns are considered one of those patterns that are repeated with time. If you want to step into forex trading or are already selling or buying the trades, use these patterns to get the maximum benefits. Because these patterns increase the chance of winning in trading. Hope you’ll understand everything that you get from this post.

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