11 Most Essential Stock Chart Patterns

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Stock chart patterns are an important trading tool that should be used as part of a technical analysis strategy. From beginners to professionals, chart patterns play an important role in finding market trends and predicting movements. They can be used to analyze all markets including forex, stocks, commodities, etc.

The stock chart patterns below are the most recognizable and common ones to look out for when using technical analysis to trade the financial markets. Our guide to the eleven most important stock chart trading patterns can be applied to most financial markets, and it can be a good way to start your technical analysis.

1. Ascending triangle

The ascending triangle is a bullish “continuation” chart pattern, meaning the probability of a breakout at the point of convergence of the triangle lines. To build this pattern, it is necessary to draw a horizontal line (resistance line) along the resistance points and an ascending line (uptrend line) along the support points.

11 Most Essential Stock Chart Patterns

2. Descending triangle

Unlike ascending triangles, a descending triangle represents a bearish downtrend in the market. The support line is horizontal and the resistance line is downward, which means that a downward breakout is possible.

3. Symmetrical triangle

For symmetrical triangles, two trend lines begin to intersect, which means a breakout in either direction. The support line is drawn in an uptrend, and the resistance line is drawn in a downtrend. Even though a breakthrough can occur in any direction, it often follows the general trend of the market.

4. Pennant

Pennants represent two lines intersecting at one point. They are often formed after strong upward or downward movements when traders pause and the price consolidates before the trend continues in the same direction.

5. Flag

The “flag” graphic pattern has the shape of an inclined rectangle, in which the support and resistance lines run parallel until the breakout. A breakout usually occurs in the opposite direction from the trend lines, that is, it is a reversal pattern. Learn more about stock breakout patterns.

6. Wedge

The “wedge” model is a narrowing price movement between the support and resistance lines, and it can be either an ascending or a descending wedge. Unlike a triangle, a wedge does not have a horizontal trend line and is characterized by either two uptrend lines or two downtrend lines.

In the case of a descending wedge, it is assumed that the price will break through the resistance, and in the case of an ascending wedge, it is assumed that the price will break through the support. This means that the wedge is a reversal pattern since the breakout occurs in the opposite direction from the general trend.

7. Double bottom

The double bottom looks like the letter W and indicates that the price has made two unsuccessful attempts to break through the support level. This is a reversal pattern, as it indicates a trend reversal. After the price has failed to break through the support level twice, it goes into an uptrend.

8. Double top

The opposite of a double bottom is a double top, similar to the letter M. After the trend fails to break through the resistance level twice, it goes into a reversal phase. Then the trend returns to the support threshold and begins a downtrend, breaking through the support line.

Learn more about trading using the “double top” and “bottom” patterns.

9. Head and shoulders

The “head and shoulders” model allows you to predict the market reversal from “bullish” to “bearish”. Characterized by a large peak with two smaller peaks on the sides, all three levels return to the same support level. After that, the trend is likely to reverse downward.

10. Rounding top or bottom

A rounded bottom or bowl usually indicates a bullish uptrend, and a rounded top indicates a bearish downtrend. Traders can buy in the middle of a U-shaped pattern, benefiting from the subsequent trend when it breaks through resistance levels.

11. Cup and handle

A cup with a handle is a well-known continuation pattern of the stock chart, signaling a bullish trend in the market. It is similar to the rounded bottom described above, but after the rounded bottom, there is a handle. The handle resembles a flag or pennant, and after its completion, you can observe a market breakthrough in a bullish uptrend.

How to easily recognize chart patterns

Graphical patterns can sometimes be quite difficult to identify on trading charts for beginners and even professional traders. Using such popular patterns as triangles, wedges, and channels, in combination with the star rating system developed by, we have created a tool that is updated every 15 minutes and constantly highlights potential emerging and completed technical trading installations. You can also manually apply stock chart patterns to your trading charts as part of our collection of drawing tools.

Patterns of trading charts often form patterns that can help to determine price actions, such as breakouts and reversals. Recognizing graphical patterns will help you gain a competitive advantage in the market, and using them will increase the value of your future technical analyses. Before proceeding to the analysis of graphical models, it is necessary to familiarize yourself with the various types of trading charts.

Stock pattern screener

Fortunately, we have integrated a pattern recognition scanner into our innovative Next Generation trading platform. Our pattern recognition scanner helps to automatically detect graphical models, saving you time and effort. The pattern recognition program collects data from more than 120 of the most popular products and warns you about potential technical trading opportunities at various time intervals. In addition, here you can find a list of well-known and effective stock screening programs.

Stock chart patterns app

Thanks to technological progress, our trading platform is also available on mobile and tablet devices. Learn more about our mobile trading apps and how you can view stock charts through our app while trading on the go. This app is available for both Android and iOS.

FAQ

What are stock chart patterns?

Stock chart models are lines and shapes plotted on price charts to predict upcoming price actions, such as breakouts and reversals. They are a method of fundamental technical analysis that helps traders use past price actions as a guideline for potential future market movements.

How many types of graphical models are there?

There are three main types of graphical models used by technical analysis specialists. These are traditional graphical models, harmonic models and candlestick patterns (which can only be determined on candlestick charts). Check out our list of the main trading patterns to start learning technical analysis.

What graphical models are often found in the Forex market?

The graphic figures “Head and shoulders” and “Triangle” are the two most common figures for traders in the Forex market. They are more common than other patterns and serve as a simple basis for further analysis and decision-making. Try using a demo account to practice recognizing graphical models.

How do stock chart patterns work?

Graphic patterns reflect the supply and demand in the market. This leads to the fact that the trend moves in a certain way on the trading chart, forming a pattern. However, the movement on the schedule is not guaranteed, and it should be used along with other methods of market analysis. Graphic patterns can be identified using our graphic pattern screener tool.

What are reversal and continuation patterns?

When a price signal changes direction, it is a reversal pattern. When the price trend persists in the same direction, it is a continuation pattern. Technical analysts have long used chart patterns as a method of forecasting price movements and trend reversals. You can use our pattern recognition software to help with the analysis.

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