In this article, we'll guide you through various chart patterns that are popular among traders. You'll learn about their key features and how to easily find them using WeWave studio's drawing and search tools. Although the studio allows for freehand drawing, we know it's helpful to have clear instructions. Once you get the hang of it, you'll be able to quickly spot market trends, giving you an advantage in your trading decisions. This skill also lets you uncover opportunities in both daily charts and short-term patterns, like those that change every 5 or 1 minute.
List of most used chart patterns
- Directional Wedges
- Pennants
- Flags
- Rectangle Chart Pattern
- cup and handle
- head and shoulder
- double top and bottom
- triple top and bottoms
- round bottom chart patterns
Continuation vs. Reversal patterns
- Continuation Patterns:
- Pennants: A small, symmetrical triangle pattern that signals a continuation of the previous trend.
- Flags: Resemble a rectangle sloping against the prevailing trend and indicate trend continuation.
- Rectangle Chart Pattern: Represents a pause in the prevailing trend and suggests continuation once the pattern is completed.
- Reversal Patterns:
- Head and Shoulders: Indicates a reversal from a bullish to a bearish trend.
- Inverse Head and Shoulders: The opposite of head and shoulders, signaling a reversal from a bearish to a bullish trend.
- Double Top and Bottom: The double top is a bearish reversal pattern, while the double bottom is a bullish reversal pattern.
- Triple Top and Bottoms: Similar to double top and bottom but with three peaks or troughs. Triple tops are bearish reversal patterns, and triple bottoms are bullish reversal patterns.
- Round Bottom Chart Patterns: Often indicate a reversal from a bearish to a bullish trend.
- Patterns That Can Be Either Continuation or Reversal:
- Directional Wedges: Can be either continuation or reversal patterns depending on the context and the direction of the wedge. Falling wedges often signal bullish reversals (or bullish continuation in a downtrend), while rising wedges typically indicate bearish reversals (or bearish continuation in an uptrend).
- Cup and Handle: Primarily considered a bullish continuation pattern, but in some contexts, it can also indicate a bullish reversal.