A practical, visual reference covering the most widely used bullish, bearish, continuation, and reversal chart patterns in technical analysis. Each pattern includes clear identification rules, confirmation signals, target estimation, stop placement, and common mistakes to avoid.
For each of the 16 patterns below, you will find: its market meaning and context, the key visual clues that define it, what confirms the setup is valid, a common method to estimate the price target, where experienced traders typically place their stop-loss, and one frequent mistake that trips up beginners.
Important: Chart patterns are most reliable when combined with broader trend analysis, volume confirmation, support and resistance levels, and disciplined risk management. No single pattern guarantees a result.
Meaning: A continuation pattern that forms after a sharp upward move (the pole). The brief pause — a small downward-sloping or sideways channel — typically reflects profit-taking rather than a trend reversal. When the pause ends, the original uptrend tends to resume.
How to identify: Look for a steep rally (the pole) followed by a tight, orderly pullback that drifts lower within roughly parallel lines. Volume usually contracts during the flag and expands on the breakout.
Confirmation: A decisive close above the upper flag boundary, ideally accompanied by a surge in volume.
Target: Measure the pole height (from the base of the rally to the top) and project that distance upward from the breakout point.
Stop: Below the most recent swing low inside the flag, or below the lower flag boundary.
Common mistake: Entering before the breakout actually occurs, or labeling any pullback after a rally as a flag when there is no clear, impulsive pole move preceding it.
Meaning: A continuation pattern that forms after a sharp decline. The brief upward or sideways drift represents a pause — often short covering or hesitation — before selling pressure resumes.
How to identify: A strong downward pole followed by a small rising or sideways channel that moves against the main bearish trend. Volume typically decreases during the flag.
Confirmation: A breakdown below the lower flag line, ideally with expanding volume confirming renewed selling.
Target: Project the length of the pole downward from the breakdown area.
Stop: Above the most recent swing high inside the flag or above the upper boundary.
Common mistake: Selling too early inside the consolidation instead of waiting for a clean, confirmed breakdown below the flag.
Meaning: A bullish continuation pattern that appears after a strong rally. Unlike a flag's parallel lines, the pennant's boundaries converge into a small symmetrical triangle, indicating tightening compression before the next leg up.
How to identify: A steep upward move followed by a brief, tight converging consolidation. Volume should noticeably contract during the pennant phase.
Confirmation: A breakout above the pennant resistance line, preferably with stronger volume than the consolidation phase.
Target: The flagpole height is added to the breakout point as a projected target.
Stop: Below the lower pennant line or below the last minor swing low.
Common mistake: Confusing a weak sideways range with a pennant when there is no strong impulse move (pole) preceding it. A true pennant requires a clear, energetic rally first.
Meaning: A bearish continuation pattern that follows a strong drop. The tight converging consolidation shows buyers and sellers compressing before sellers regain control.
How to identify: A sharp downward move followed by a tight converging triangle that drifts sideways or slightly upward. Volume should decline during the pennant.
Confirmation: A breakdown below pennant support, ideally with heavier selling volume.
Target: Project the flagpole distance downward from the breakdown point.
Stop: Above the upper pennant line or above the last short-term swing high.
Common mistake: Mistaking random volatility for a pennant without a clear preceding impulse move. The pattern requires a defined pole.
Meaning: A bearish reversal pattern that often appears after an extended uptrend. The two peaks at roughly the same level show that buyers tried twice to push higher and failed both times, signaling exhaustion.
How to identify: Price forms two peaks at roughly the same level with a pullback valley between them. The peaks don't need to be identical — a small difference is normal.
Confirmation: A break below the neckline — the low between the two tops.
Target: The height from the tops to the neckline, projected downward from the neckline break.
Stop: Above the second top or slightly above the resistance zone.
Common mistake: Assuming the pattern is complete before the neckline actually breaks. Until the neckline fails, the double top is only potential — not confirmed.
Meaning: A bullish reversal pattern that often forms after a downtrend. Two lows near the same level indicate that sellers could not push the price lower, suggesting a shift in momentum toward buyers.
How to identify: Price creates two lows near the same area with a rebound between them.
Confirmation: A breakout above the neckline — the high between the two bottoms.
Target: The height from the neckline to the lows, projected upward from the breakout.
Stop: Below the second bottom or slightly under the support zone.
Common mistake: Buying too early before the neckline resistance breaks. The reversal is not confirmed until that level gives way.
Meaning: A bearish reversal pattern showing repeated failure to break resistance. Three failed attempts to move higher demonstrate strong selling pressure at that level.
How to identify: Three peaks form at a similar level, with two pullbacks between them. The support between pullbacks creates the neckline.
Confirmation: A breakdown below the support area formed by the reaction lows.
Target: The height of the pattern projected downward from the breakdown.
Stop: Above the third top or above the resistance band.
Common mistake: Treating equal highs alone as enough evidence without waiting for the support level to actually fail and confirm the reversal.
Meaning: A bullish reversal pattern showing repeated defense of support. Three bounces off the same zone demonstrate that buyers consistently step in at that price.
How to identify: Three lows form in a similar support zone, with rebounds between them creating a resistance line above.
Confirmation: A breakout above the resistance area created by the reaction highs.
Target: The height of the formation projected upward from the breakout.
Stop: Below the third low or beneath the support band.
Common mistake: Buying inside the pattern without confirmation that resistance has been cleared. Wait for the breakout.
Meaning: One of the most recognized bearish reversal patterns. It forms near the end of an uptrend and signals that buying momentum is fading — each successive rally produces a lower high on the right shoulder.
How to identify: A left shoulder peak, a higher head peak, and a lower right shoulder peak, all connected by a neckline drawn through the two troughs between them.
Confirmation: A break below the neckline completes the pattern. Volume often increases on the breakdown.
Target: The distance from the head to the neckline, projected downward from the neckline break.
Stop: Above the right shoulder or above the neckline after a failed retest.
Common mistake: Labeling every uneven three-peak structure as head and shoulders. The pattern needs reasonable symmetry, a clear neckline, and proper trend context.
Meaning: The mirror image of head and shoulders, forming after a prolonged decline. It signals that selling pressure is weakening and buyers are gaining control — the right shoulder creates a higher low.
How to identify: A left shoulder low, a deeper head low, and a higher right shoulder low, connected by a neckline through the intervening highs.
Confirmation: A breakout above the neckline confirms the reversal. Volume typically picks up on the breakout.
Target: The depth from the head to the neckline, projected upward from the breakout.
Stop: Below the right shoulder or below the neckline if the breakout fails.
Common mistake: Entering too early before the neckline breaks and volume supports the move. Patience is essential.
Meaning: Usually a bearish pattern. It may appear as a reversal after an uptrend or as a continuation during a downtrend. The converging upward-sloping lines show that each rally is weaker than the last, suggesting momentum exhaustion.
How to identify: Price rises inside two upward-sloping lines that converge toward each other, while momentum indicators often show divergence.
Confirmation: A break below the lower wedge boundary is the main trigger.
Target: The widest part of the wedge projected downward from the breakdown.
Stop: Above the latest swing high or above the upper wedge line.
Common mistake: Assuming every upward channel is a wedge. The key difference: wedge lines must converge, showing compression and weakening momentum.
Meaning: Usually a bullish pattern. It may signal reversal after a decline or continuation within an uptrend. The converging downward-sloping lines indicate that selling pressure is fading.
How to identify: Price declines inside two downward-sloping converging lines while downside momentum progressively weakens.
Confirmation: A breakout above the upper wedge line is the typical confirmation.
Target: The widest part of the wedge projected upward from the breakout.
Stop: Below the latest swing low or below the lower wedge line.
Common mistake: Selling the pattern as if it were a bearish continuation without recognizing the loss of downside momentum that defines the wedge.
Meaning: A consolidation pattern that can resolve in either direction depending on the type of triangle and the broader context. Symmetrical triangles are neutral; ascending triangles lean bullish; descending triangles lean bearish.
How to identify: Price compresses between converging trend lines, creating progressively smaller swings. Each high is lower and each low is higher (symmetrical), or one side remains flat.
Confirmation: A breakout or breakdown beyond one of the triangle boundaries, ideally with stronger volume.
Target: The widest part of the triangle projected from the breakout point.
Stop: Inside the triangle, often just beyond the opposite side of the breakout.
Common mistake: Trading the middle of the pattern repeatedly instead of waiting for a clear resolution at the apex.
Meaning: A range-bound consolidation pattern that can act as either continuation or reversal depending on where it forms and which side breaks first.
How to identify: Price bounces between horizontal support and horizontal resistance, creating a clear trading range with well-defined boundaries.
Confirmation: A breakout above resistance or a breakdown below support confirms direction.
Target: The height of the rectangle projected from the breakout level.
Stop: Back inside the range, usually beyond the opposite side of the breakout trigger.
Common mistake: Assuming direction before price actually leaves the range. Let the breakout happen first.
Meaning: A bullish continuation or reversal pattern showing a rounded recovery (the cup) followed by a shallow pullback (the handle). The rounded shape suggests gradual sentiment improvement rather than a sharp V-bounce.
How to identify: A rounded U-shaped cup forms first, then a smaller handle drifts lower or sideways near the cup's rim resistance.
Confirmation: A breakout above the handle or above the cup rim confirms the setup.
Target: The cup depth projected upward from the breakout zone.
Stop: Below the handle low or beneath the right side support area.
Common mistake: Using a V-shaped bounce as a cup when the rounded base is not well developed. The gradual, rounded shape is what makes this pattern meaningful.
Meaning: A bearish continuation or reversal pattern showing a rounded top (the inverted cup) followed by a weak upward rebound (the handle). The rounded top indicates that buyers gradually lost conviction.
How to identify: An inverted rounded structure forms first, then a small handle tilts upward or sideways near the support area.
Confirmation: A breakdown below the handle or below the lower rim confirms bearish continuation.
Target: The depth of the inverted cup projected downward from the breakdown point.
Stop: Above the handle high or above the resistance area on the right side.
Common mistake: Ignoring the broader downtrend context and treating the small handle rebound as strength. The handle is a weak bounce, not a reversal.