Chart pattern is a shape drawn on the price chart to predict future price movements based on the past data.
Chart patterns are split into below three types, depending on the price behaviour.
1 Reversal Chart Patterns: They signal the ongoing trend is about to change and price will reverse direction.
2 Continuation Chart Patterns: They signal that ongoing trend will continue and price will continue in current direction
3 Bilateral Chart Patterns: They signal that the ongoing trend will either continue or it can change direction.
Examples of Chart pattern types.
Continuation Patterns Examples :
- Flag, Pennant
- Rectangle
- Price Channel
- Measured Move – Bullish
- Measured Move – Bearish
- Cup with Handle
Reversal Patterns Examples :
- Double Top Reversal
- Double Bottom Reversal
- Head and Shoulders Top
- Head and Shoulders Bottom
- Falling Wedge
- Rising Wedge
- Rounding Bottom
- Triple Top Reversal
- Triple Bottom Reversal
- Bump and Run Reversal
Bilateral patterns Examples :
- Ascending Triangle
- Descending Triangle
- Symmetrical Triangle
Traders & Investors chart patterns as a technical analysis tool to determine the projected price of securities.
Practice Chart Patterns – Beginner