Glossary › Patterns

Trading glossary

Patterns words

30 words, each explained first as you would tell a ten-year-old.

1. apexThe tip where two slanted lines on a chart meet, like the point of a triangle.
2. ascending triangleA chart shape where the top stays flat but the dips keep getting higher, squeezing price until it often breaks out.
3. bear flagA chart shape: a fast drop, then a small, weak bounce, then often another drop, like a flag hanging from a pole.
4. bull flagA chart shape: a fast rise, then a small calm dip, then often another rise, like a flag on a pole.
5. busted patternA chart shape that breaks one way, then quickly snaps back and runs the other way, trapping people who trusted it.
6. chart patternA shape that price draws on a chart, like a triangle or a double top, that hints what might happen next.
7. continuationWhen price takes a short rest and then keeps going the same way it was already going.
8. continuation patternA chart shape that shows a pause inside a steady move, after which the move often carries on the same way.
9. converging linesTwo lines on a chart that get closer and closer together, like the sides of a triangle.
10. cup and handleA chart shape like a teacup from the side: a round dip, a small dip for the handle, then a jump above the cup's top.
11. descending triangleA chart shape where the bottom stays flat but the tops keep getting lower, squeezing price until it often breaks down.
12. double bottomA W-shaped chart pattern: price falls to about the same low twice, then climbs past the high between them.
13. double topAn M-shaped chart pattern: price rises to about the same high twice, then falls below the dip between them.
14. failed patternA chart pattern that did not do what it usually hints at, so price went the other way.
15. falling wedgeA chart shape where price keeps falling, but each drop is smaller, squeezing into a point before it often breaks upward.
16. flagpoleThe fast, straight move before a flag pattern, like the pole a flag hangs on.
17. head and shouldersA chart shape with three peaks, the middle one highest, like a head between two shoulders. A drop below its base can start a fall.
18. inverse head and shouldersThree dips with the middle one deepest, like an upside-down head between two shoulders. A climb above its top line can start a rise.
19. left shoulderThe first of three peaks in a chart shape that looks like a head between two shoulders.
20. measured moveA simple way to guess how far price might travel: measure how tall the pattern is and copy that from where price broke out.
21. necklineThe line that joins the dips (or tops) between the peaks of a chart shape. Crossing it completes the shape.
22. pattern heightHow tall a chart shape is, from its top to its bottom, used to guess how far price might go next.
23. reversal patternA chart shape that hints price may turn around, like a double top after a climb.
24. right shoulderThe last of three peaks in a chart shape that looks like a head between two shoulders.
25. rimThe top of the cup in a chart shape that looks like a teacup with a handle.
26. rising wedgeA chart shape where price climbs between two rising lines that squeeze together, and then it often breaks down.
27. rounded bottomA smooth, bowl-shaped dip on a chart, where price slowly turns from falling to rising.
28. symmetrical triangleA chart shape where the tops get lower and the dips get higher, squeezing price into a point before it breaks out either way.
29. triangleA chart shape where price gets squeezed between two lines that come together, before it breaks out.
30. wedgeA chart shape where price moves between two slanted lines that squeeze together, both going up or both going down.