Lessons › Chart patterns

World 3 · 18 lessons

Chart patterns

Double tops and bottoms, flags, triangles, head and shoulders, wedges and cup and handle, with measured moves, volume and failure statistics.

1. 1. Chart patterns: shapes the crowd drawsChart patterns are shapes made by buyers and sellers fighting, and they hint at what comes next but never promise it.
2. 2. Double topPrice hits the same ceiling twice and fails, and breaking the valley between the peaks confirms the top.
3. 3. Double bottomPrice bounces off the same floor twice, and breaking the peak between the bounces confirms the bottom.
4. 4. Bull flagA fast rise, a small calm drift down, then another push up: the flag is the market catching its breath.
5. 5. Bear flagA fast drop, a small weak bounce, then another drop: the bounce is just a pause.
6. 6. Ascending triangleSellers hold a flat ceiling while buyers keep stepping in higher, so something has to give.
7. 7. Descending triangleBuyers hold a flat floor while sellers push down from lower and lower highs, and the break can go either way.
8. 8. Symmetrical triangleHighs get lower and lows get higher until price is squeezed, and nobody knows the direction until it breaks.
9. 9. Head and shouldersThree peaks with the middle one highest show buyers getting weaker, and breaking the neckline confirms the top.
10. 10. Inverse head and shouldersThree dips with the middle one lowest show sellers running out of power, and breaking the neckline confirms the bottom.
11. 11. Rising wedgePrice climbs, but each push gains less than the one before, and the squeeze often breaks down.
12. 12. Falling wedgePrice falls, but each drop is smaller than the last, and the squeeze often breaks up.
13. 13. Cup and handleA rounded dip, a small rest near the top, then a break above the rim: the market refilled its cup.
14. 14. Targets: measured movesMeasure the pattern's height and copy it from the break point, then treat it as a guide, not a promise.
15. 15. Volume inside patternsQuiet volume while a pattern forms and loud volume when it breaks is the classic healthy footprint.
16. 16. When patterns failWhen a pattern breaks and then snaps back, the traders who trusted it get trapped, and price can run hard the other way.
17. 17. Probabilities, not promises: reading pattern statsA pattern that works 6 times out of 10 still fails 4 times, so what matters is how you handle the 4.
18. 18. Pattern challenge: plan it before you trade itName the pattern, find where you are wrong, find where you might be right, and only then decide.