Chart Patterns: Complete Summary

This summary covers all major chart patterns. Use it as a quick reference guide for identifying and trading price formations.

Pattern Categories

Reversal Patterns

Signal Trend Change:

Head and Shoulders
Double Top/Bottom
Triple Top/Bottom
Rounding Top/Bottom
Diamond

Continuation Patterns

Signal Trend Continues:

Flags
Pennants
Rectangles (often)
Triangles (often)
Cup and Handle

Bilateral Patterns

Could Break Either Way:

Symmetrical Triangles
Rectangles in ranges
Diamonds (sometimes)

Reversal Patterns Quick Reference

Head and Shoulders

Structure: Three peaks, middle highest Signal: Bearish reversal Entry: Break below neckline Target: Head height projected down

Inverse Head and Shoulders

Structure: Three troughs, middle lowest Signal: Bullish reversal Entry: Break above neckline Target: Head height projected up

Double Top

Structure: Two peaks at similar level (M-shape) Signal: Bearish reversal Entry: Break below neckline Target: Height projected down

Double Bottom

Structure: Two troughs at similar level (W-shape) Signal: Bullish reversal Entry: Break above neckline Target: Height projected up

Triple Top/Bottom

Structure: Three tests of same level Signal: Reversal (stronger than double) Entry: Break through neckline Target: Height projected

Rounding Bottom

Structure: U-shaped gradual bottom Signal: Bullish reversal Entry: Break above left side high Target: Depth projected up

Rounding Top

Structure: Inverted U-shaped top Signal: Bearish reversal Entry: Break below left side low Target: Height projected down

Continuation Patterns Quick Reference

Bull Flag

Structure: Flagpole up, rectangular pullback Signal: Bullish continuation Entry: Break above flag Target: Flagpole height projected

Bear Flag

Structure: Flagpole down, rectangular rally Signal: Bearish continuation Entry: Break below flag Target: Flagpole height projected

Pennant

Structure: Flagpole + triangular consolidation Signal: Continuation in flagpole direction Entry: Break in trend direction Target: Flagpole height projected

Ascending Triangle

Structure: Flat top, rising bottom Signal: Usually bullish Entry: Break above flat resistance Target: Height projected up

Descending Triangle

Structure: Flat bottom, falling top Signal: Usually bearish Entry: Break below flat support Target: Height projected down

Symmetrical Triangle

Structure: Converging trend lines Signal: Continuation (usually) Entry: Trade breakout direction Target: Height projected

Cup and Handle

Structure: U-shaped cup + small handle Signal: Bullish continuation Entry: Break above handle Target: Cup depth projected

Other Patterns Quick Reference

Rectangle

Structure: Horizontal support and resistance Signal: Continuation or reversal Entry: Breakout direction Target: Height projected

Wedge (Rising)

Structure: Both lines slope up, converging Signal: Bearish Entry: Break below lower line Target: Height projected

Wedge (Falling)

Structure: Both lines slope down, converging Signal: Bullish Entry: Break above upper line Target: Height projected

Channel

Structure: Parallel trend lines Signal: Trade range or breakout Entry: Boundaries or breakout Target: Channel width

Diamond

Structure: Broadening then narrowing Signal: Reversal Entry: Breakout direction Target: Height projected

Pattern Measurement Rules

Height Projection

Universal Method:

Measure pattern height (high to low)
Project from breakout point
In direction of break
= Minimum target

Examples

Pattern	Measure	Project From
H&S	Head to neckline	Neckline
Double Top	Peak to neckline	Neckline
Triangle	Widest point	Breakout
Flag	Flagpole	Flag break

Volume Guidelines

During Formation

Most Patterns:

Volume decreases
Interest waning
Energy compressing

At Breakout

Requirement:

Volume increases
Confirms conviction
Validates break

Warning Sign

Concern:

Low volume break
Potential false signal
Less reliable

Pattern Quality Factors

Higher Probability

Better When:

Clear, defined shape
Multiple touches
Higher timeframe
Volume confirms
Trend context aligns

Lower Probability

Weaker When:

Messy formation
Few touches
Lower timeframe
Low volume
Counter to trend

Trading Checklist

Before Entry

[ ] Pattern clearly identified
[ ] Shape well-defined
[ ] Breakout confirmed
[ ] Volume supporting
[ ] Entry level clear
[ ] Stop loss placed
[ ] Target calculated
[ ] Risk/reward acceptable

During Trade

[ ] Monitoring progress
[ ] Adjusting stops
[ ] Taking partials at targets
[ ] Following plan

Common Mistakes

Forcing patterns that don't exist
Trading incomplete patterns
Ignoring pattern context
Wrong pattern identification

Anticipating breakouts
Chasing extended moves
No confirmation
Wrong entry strategy

No stop loss
Moving stops incorrectly
Not taking profits
Over-managing trades

Pattern Trading Tips

Be Patient

Wait For:

Pattern completion
Confirmed breakout
Don't rush

Confirm Everything

Require:

Price confirmation
Volume confirmation
Trend alignment

Manage Risk

Always:

Define stop before entry
Position size appropriately
Accept some failures

Keep Learning

Continuously:

Study patterns
Review trades
Improve recognition

Pattern Success Rates

General Guidelines

No chart pattern has a fixed success rate. Measured across five major pairs and ten years of daily data, no single pattern's result was solid enough to trade on by itself. Treat a pattern as a place to put a stop, not as odds (Forex Trading Strategies, ch. 3).

Key Takeaways

Two main categories: reversal and continuation
All patterns have measured targets
Volume confirms breakouts
Pattern quality affects reliability
Wait for confirmation
Higher timeframe = more significant
Risk management essential
Not all patterns succeed
Context improves probability
Practice pattern recognition

Technical Analysis Progress

Completed:

TA Basics
Chart Patterns

Next:

Technical Indicators
Advanced TA

This article is for educational purposes only and does not constitute financial advice.

Risk warning. This is education only, not financial, investment, tax or legal advice, and not a recommendation to buy or sell anything. Trading forex, CFDs, stocks, commodities, futures, options and crypto is high-risk; with leverage you can lose more than you deposit, and most retail traders lose money. Before you trade or invest in any form, check the local laws where you are and the rules of your country of residence, and consider your own financial situation; if in doubt, ask a licensed adviser. Past and tested results, and all examples, are for illustration only and do not guarantee future results.