Chart patterns guide
Chart patterns are recurring shapes in price that describe a shift, or a pause, in the balance between buyers and sellers. Each guide covers how to identify the pattern, what confirms it, what invalidates it and how targets are usually projected.
Reversal patterns
Head and ShouldersA head and shoulders is a three-peak reversal pattern that forms after an uptrend: a higher middle peak (the head) between two lower peaks (the shoulders), all resting on a shared floor called the neckline.Inverse Head and ShouldersAn inverse head and shoulders is the bullish mirror of the classic pattern: three troughs after a downtrend, with the middle one (the head) the deepest, capped by a neckline that price needs to break upwards.Double TopA double top forms when price rallies to a high, pulls back, rallies to roughly the same high again and fails. The low between the two peaks is the line that confirms the reversal when it breaks.Double BottomA double bottom is two tests of roughly the same low separated by a bounce. It suggests sellers could not push price lower a second time, and it confirms when price breaks above the high between the two lows.Triple TopA triple top shows price failing three times at roughly the same high. Each rejection adds evidence that sellers are defending the level, and the pattern confirms when price breaks below the lows between the peaks.Triple BottomA triple bottom forms when price tests the same low three times and holds each time. It confirms when price breaks above the highs between the troughs.Rising WedgeA rising wedge has both boundaries sloping upward, with the lower line rising faster than the upper one. Price is still making higher highs, but each push gains less ground, which often precedes a break lower.Falling WedgeA falling wedge has both boundaries sloping downward, with the upper line falling faster than the lower one. Price keeps making lower lows, but each drop loses momentum, and a break above the upper line is the bullish trigger.Rounding BottomA rounding bottom, or saucer bottom, is a gradual U-shaped turn from falling prices to rising ones. It reflects selling pressure fading slowly rather than a sudden reversal.Rounding TopA rounding top is a gradual dome-shaped turn from rising prices to falling ones. Buying pressure fades slowly instead of collapsing at a single peak.Diamond TopA diamond top forms after an uptrend when price swings widen (like a broadening formation) and then narrow (like a symmetrical triangle). The breakdown from the lower right edge completes the reversal.Diamond BottomA diamond bottom forms after a downtrend when swings first widen and then narrow, outlining a diamond. A breakout from the upper right edge completes the reversal.
Continuation patterns
Ascending TriangleAn ascending triangle has a flat upper boundary and a rising lower trendline. Buyers keep stepping in at higher prices while sellers defend the same ceiling, compressing price until one side gives way.Descending TriangleA descending triangle has a flat lower boundary and a falling upper trendline. Sellers keep pressing at lower prices while buyers defend the same floor, until the floor gives way or the falling highs are broken.Bull FlagA bull flag forms when a sharp rally (the pole) is followed by a short, controlled pullback in a small downward-sloping channel (the flag). It suggests the market is pausing rather than reversing.Bear FlagA bear flag forms when a sharp drop (the pole) is followed by a short, controlled bounce in a small upward-sloping channel (the flag). It suggests a pause before the decline may continue.Bullish PennantA bullish pennant is a brief consolidation shaped like a small symmetrical triangle that forms right after a sharp rally. Like a flag, it reads as a pause in a strong move rather than a reversal.Bearish PennantA bearish pennant is a short, compact triangle that forms right after a sharp decline. It suggests a pause before the move lower may continue.Cup and HandleA cup and handle is a U-shaped base (the cup) followed by a shallow pullback (the handle) near the old high. A break above the rim suggests the base has finished and the prior uptrend may continue.Inverse Cup and HandleAn inverse cup and handle is an upside-down cup (a rounded top) followed by a small bounce (the handle). A break below the base suggests the decline may continue.Ascending ChannelAn ascending channel is an uptrend contained between two parallel, upward-sloping lines. The lower line connects higher lows and the upper line connects higher highs.Descending ChannelA descending channel is a downtrend contained between two parallel, downward-sloping lines. The upper line connects lower highs and the lower line connects lower lows.
Two-sided patterns
Symmetrical TriangleA symmetrical triangle forms when lower highs and higher lows converge. It shows a market coiling with neither side in control, and it is resolved by whichever boundary breaks first.Rectangle (Trading Range)A rectangle, or trading range, forms when price moves sideways between a flat ceiling and a flat floor. It reflects balance between buyers and sellers until a breakout settles it.Broadening Formation (Megaphone)A broadening formation, also called a megaphone, has swings that get bigger over time: each high is higher and each low is lower. It reflects a volatile, indecisive market.
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.