Technical Analysis · Chart Patterns
20 Chart Patterns Every Trader Must Know
The complete technical analysis chart patterns cheat sheet. Reversals, continuations, triangles, wedges — every pattern you'll encounter, with the signal it gives and exactly how to trade it.
📅 April 20, 2026
⏱ 8 min read
📊 20 patterns covered
Chart patterns are the language of price action. Every time buyers and sellers battle it out, they leave a fingerprint on the chart — and those fingerprints repeat. Learn to read them, and you're reading the collective psychology of the market.
This cheat sheet covers all 20 patterns that show up most often, across stocks, crypto, forex, and commodities. Each entry includes the pattern's shape, what it signals, and a concrete entry approach.
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📉 Reversal Patterns
Reversal patterns signal that the current trend is running out of steam and price is likely to change direction. They're highest-probability at key support and resistance levels.
Three peaks with the middle peak (head) higher than the two outer peaks (shoulders). Forms after an uptrend. Neckline connects the two troughs between the peaks.
EntryEnter short on a confirmed close below the neckline. Stop above the right shoulder. Target = neckline − head-to-neckline distance.
Mirror of H&S — three troughs with the middle trough (head) lower. Forms after a downtrend. One of the most reliable reversal setups in technical analysis.
EntryEnter long on a breakout above the neckline with volume confirmation. Stop below the right shoulder. Target = neckline + head-to-neckline distance.
Price makes two near-equal highs with a moderate pullback between them, forming an "M" shape. Second peak often comes on lower volume — distribution in progress.
EntryShort when price breaks below the trough between the two peaks. Stop just above the highs. Target = distance from highs to trough, projected down.
Two near-equal lows with a bounce between them — a "W" shape. Often forms after extended downtrends. Signals accumulation and buyer absorption at support.
EntryLong on a break above the middle peak (the "neckline" of the W). Stop below the second low. Target = height of the W projected upward.
Three roughly equal highs — price tests the same resistance level three times and fails each time. Stronger reversal signal than a double top; resistance is extremely confirmed.
EntryShort on break below support connecting the two troughs. Stop above the three highs. Target = height of the pattern projected down from the breakdown.
Three near-equal lows — price tests support three times and holds each time. Powerful reversal signal after a downtrend; buyers are clearly in control at this level.
EntryLong on a breakout above the resistance connecting the two interim highs. Stop below the triple lows. Target = height of the pattern.
A slow, curved U-shape as selling pressure gradually gives way to buying. Forms over weeks or months. One of the most reliable long-term reversal signals — think sector rotations and long-base breakouts.
EntryLong when price breaks above the rim (resistance at the top of the cup). Volume should surge on the breakout. Stop below the rim.
Price gaps up (or down), consolidates for a few days, then gaps back in the opposite direction — leaving an "island" of candles isolated by two gaps. High-conviction signal, often follows climactic moves.
EntryEnter in the direction of the second gap as it forms. The twin gaps create a strong vacuum — price typically moves fast after the island completes.
📈 Continuation Patterns
Continuation patterns form when the trend pauses to consolidate before resuming. They're often brief and offer excellent risk/reward — tight stops near the consolidation low/high with a measured move target.
A sharp upward move (the pole) followed by a brief, tight consolidation drifting slightly downward (the flag). Volume contracts during the flag, then expands sharply on breakout.
EntryLong on a break above the upper trendline of the flag channel. Stop below the bottom of the flag. Target = pole length added to the breakout point.
Mirror of the bull flag — a sharp drop (the pole) followed by a shallow upward drift (the flag). Classic "dead cat bounce" before the next leg down. Dangerous trap for dip buyers.
EntryShort on a break below the lower trendline of the flag. Stop above the flag's high. Target = pole length subtracted from the breakdown point.
Similar to a flag but the consolidation forms a small symmetrical triangle (converging trendlines) instead of a channel. Usually very short duration — days, not weeks.
EntryLong on breakout above the upper trendline of the pennant. Stop below the pennant's low. Target = pole length from breakout.
A U-shaped base (the cup) followed by a brief pullback (the handle). Classic William O'Neil pattern. The handle typically retraces 10–20% of the cup's height — anything deeper invalidates the setup.
EntryLong on a breakout above the cup's rim on above-average volume. Stop below the handle's low. Target = cup's depth added to the breakout level.
Flat upper resistance with rising lows forming an ascending trendline. Buyers are getting more aggressive with each test of resistance. Breakout probability skews bullish.
EntryLong on a confirmed breakout above the flat resistance with volume. Stop just below the most recent higher low. Target = height of the triangle added to the breakout.
Flat lower support with declining highs. Sellers are pressing harder with each rally attempt. Probability favors a breakdown, though false breakouts to the upside do occur — wait for confirmation.
EntryShort on a confirmed breakdown below flat support with volume expansion. Stop above the most recent lower high. Target = height of the triangle subtracted from the breakdown.
Converging trendlines with lower highs and higher lows — a coiling spring. Direction is undetermined until the breakout. Can break either way; follow price, not prediction.
EntryEnter in the direction of the breakout with volume confirmation. Stop inside the triangle. Target = height of the triangle from the breakout point.
Both trendlines slope upward but converge — the upper line rises slower than the lower. Despite the upward appearance, this is a bearish pattern. Volume typically decreases as the wedge forms.
EntryShort on a break below the lower trendline. Stop above the prior swing high. Target = height of the wedge from the breakdown, or back to the wedge's origin.
Both trendlines slope downward and converge. Despite the downward appearance, this is a bullish pattern — selling pressure is exhausting itself. Often forms during corrections in strong uptrends.
EntryLong on a breakout above the upper trendline with a volume spike. Stop below the most recent low. Target = height of the wedge from the breakout.
Price oscillates between flat support and resistance — a box. The trend resumes when price breaks out. Horizontal channels often form after strong trending moves, representing consolidation before continuation.
EntryTrade the breakout in the direction of the prior trend. Wait for a close outside the range. Target = height of the rectangle added to the breakout level.
Price trends up within two parallel upward-sloping trendlines. You can trade pullbacks to the lower channel line as continuation entries, or watch for a breakdown as an early reversal signal.
EntryLong near the lower channel line with a stop below it. Short if price breaks below the lower line with strong momentum — that often leads to a sharp reversal.
Price trends down within two parallel downward-sloping trendlines. Rallies to the upper channel line are short opportunities. A breakout above the upper line often signals trend reversal.
EntryShort near the upper channel line with a stop above it. Watch carefully if price breaks above — a channel breakout in either direction often leads to a fast, extended move.
⚡ Quick Reference: All 20 Patterns
Use this table as a fast lookup when you spot a potential pattern forming. Remember: always wait for confirmation — an unconfirmed pattern is just a guess.
| Pattern |
Type |
Signal |
Confirmation |
| Head & Shoulders | Reversal | Bearish | Neckline break + volume |
| Inverse H&S | Reversal | Bullish | Neckline break + volume |
| Double Top | Reversal | Bearish | Trough break |
| Double Bottom | Reversal | Bullish | Middle peak break |
| Triple Top | Reversal | Bearish | Support break |
| Triple Bottom | Reversal | Bullish | Resistance break |
| Rounding Bottom | Reversal | Bullish | Rim breakout + volume |
| Island Reversal | Reversal | Both | Gap in opposite direction |
| Bull Flag | Continuation | Bullish | Upper channel break |
| Bear Flag | Continuation | Bearish | Lower channel break |
| Pennant (Bull) | Continuation | Bullish | Upper trendline break |
| Cup & Handle | Continuation | Bullish | Rim break + volume |
| Ascending Triangle | Continuation | Bullish | Flat resistance break |
| Descending Triangle | Continuation | Bearish | Flat support break |
| Symmetrical Triangle | Continuation | Neutral | Either trendline break |
| Rising Wedge | Continuation | Bearish | Lower trendline break |
| Falling Wedge | Continuation | Bullish | Upper trendline break |
| Rectangle Channel | Continuation | Neutral | Range break + volume |
| Rising Channel | Continuation | Bullish | Lower channel touch |
| Descending Channel | Continuation | Bearish | Upper channel touch |
🎯 How to Actually Trade Chart Patterns
Patterns don't work in isolation. Before you enter any chart pattern trade, check these four things:
1. Confirm with volume. The most common mistake is entering a breakout without volume confirmation. A price break on low volume is often a false breakout — price will snap back into the range. You want a minimum 50% increase in volume over the average on a breakout candle.
2. Check the trend context. A bullish reversal pattern in a strong downtrend is lower probability than the same pattern at the start of a new uptrend. Always ask: is this pattern going with or against the larger trend? For a framework on how to size and diversify positions across crypto, gold, and equities within a single portfolio, see the Multi-Asset Portfolio Strategy guide.
3. Place stops before you enter. Know exactly where your stop goes before the trade is live. For most patterns, that's just beyond the pattern's boundary — below the handle for cup & handle, above the right shoulder for head & shoulders.
4. Use the measured move as a minimum target. Most chart patterns have a built-in target calculation (height of pattern = minimum price move). That's your first profit target — not a guaranteed outcome, but a structurally defensible level.
⚠ Pattern Recognition Isn't Prediction
No chart pattern has a 100% win rate. Even the most reliable setups fail roughly 30% of the time. The edge isn't in any single trade — it's in position sizing correctly, cutting losers fast, and letting winners run. Patterns give you high-probability setups; risk management determines whether you stay solvent long enough to collect on them.
🔧 Indicators That Pair with Chart Patterns
Chart patterns are price-action based, but these indicators add confirmation and filter out noise:
RSI (Relative Strength Index): Look for divergence — price makes a higher high but RSI makes a lower high. That's a classic signal that the move is losing momentum and a reversal pattern is more likely to complete.
MACD: A MACD crossover in the direction of your pattern breakout adds conviction. A breakout with a fresh bullish MACD cross is stronger than one where MACD is extended or rolling over.
Volume: Not technically an indicator, but the most important confirmation tool. A breakout candle should have volume at least 1.5–2x the 20-day average for institutional-grade confirmation.
Moving Averages: Patterns that form around the 50-day or 200-day MA have added technical significance — they represent where institutions set their own stops and entries. For how these key technical levels apply specifically to gold and precious metals — which trade with their own structural dynamics — the Gold Investment Guide covers gold's market structure and when chart patterns have the highest predictive value.
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