This is a trading cheat sheet that categorizes different candlestick chart patterns into three groups: Reversal, Continuation, and Bilateral Patterns. These patterns help traders analyze market trends and make informed trading decisions.
1. Reversal Chart Patterns (Indicate a trend reversal)
Double Top (Bearish) â Two peaks at resistance, break below neckline confirms downtrend.
Head & Shoulders (Bearish) â Three peaks, break below neckline signals trend change.
Rising Wedge (Bearish) â Upward narrowing channel, breaks downward.
Double Bottom (Bullish) â Two troughs at support, break above neckline confirms uptrend.
Inverse Head & Shoulders (Bullish) â Three troughs, break above neckline signals trend change.
Falling Wedge (Bullish) â Downward narrowing channel, breaks upward.
2. Continuation Chart Patterns (Confirm existing trend will continue)
Falling Wedge (Bullish) â Breaks upward, continuing the trend.
Bullish Rectangle â Horizontal consolidation, breaks upward.
Bullish Pennant â Small symmetrical triangle after uptrend, breaks upward.
Rising Wedge (Bearish) â Breaks downward, continuing the trend.
Bearish Rectangle â Horizontal consolidation, breaks downward.
Bearish Pennant â Small symmetrical triangle after downtrend, breaks downward.
3. Bilateral Chart Patterns (Price can break out in any direction)
Ascending Triangle â Rising lows, horizontal resistance, breakout depends on momentum.
Descending Triangle â Falling highs, horizontal support, breakout depends on market conditions.
Symmetrical Triangle â Converging trendlines, breakout in either direction.
Key Takeaways:
Reversal patterns â Trend is changing.
Continuation patterns â Trend will continue.
Bilateral patterns â Uncertainty, breakout in either direction.
Why is this useful?
Helps traders identify trends and make better trading decisions.
Provides entry & exit points for risk management.
Improves accuracy in technical analysis.
If youâre into trading, understanding these patterns can help reduce losses and improve profitability.