Chart Patterns

Chart Patterns 

Chart patterns are visual formations on a price chart that traders use to predict future market movements. They're a big part of technical analysis and come in different types based on what they signal: continuation, reversal, or bilateral movement. Here's a breakdown of the most common chart patterns:

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Reversal Patterns

These indicate a possible change in the current trend.

1. Head and Shoulders

   • Top: Signals a reversal from uptrend to downtrend.
   • Bottom (Inverse): Signals a reversal from downtrend to uptrend.

2. Double Top and Double Bottom

   • Double Top: Bearish reversal.
   • Double Bottom: Bullish reversal.

3. Triple Top and Triple Bottom

   • Similar to double patterns but with three peaks or valleys.

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Continuation Patterns

These suggest that the existing trend will likely continue.

1. Flags and Pennants

   • Small consolidations before trend continuation.
   • Bullish or Bearish, depending on the direction of the trend.

2. Rectangles (Trading Ranges)

   • Price bounces between support and resistance.
   • Breakout direction confirms the pattern.

3. Cup and Handle

   • Bullish continuation pattern.
   • Resembles a cup with a small pullback (handle).

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Bilateral Patterns

Can break in either direction — used to prepare for volatility.

1. Symmetrical Triangle
   • Price converges with lower highs and higher lows.
   • Breakout can be either up or down.

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