1.

Head and Shoulders Top

If you see below three aspects in a chart, you can call it a “head and
shoulders – top” pattern.

1. You will see a central peak and two smaller peaks on either side.
2. You will find two lows between the three peaks.
3. You can draw an imaginary line (neckline) passing through the troughs.
4. After the third peak, the prices will break the neckline and fall further
down.

Head And Shoulders TOP

A “head and shoulders top” pattern denotes a trend reversal. (A price fall is
likely).

2. Head and Shoulders Bottom

This pattern is a mirror image of the previous “TOP” pattern. You will find the
below aspects.

1. A low with two higher-lows on either side.

2. Two peaks between the three lows.
3. A neckline through the peaks.
4. After the third low, the prices will break the neckline and begin to rise.
 Head And Shoulders Bottom
Since this pattern is a mirror image of the “head and shoulders top”, you
should know how to interpret. Well, you guessed right. The prices are going to
rise!

3. Double Top (M-Shaped) Pattern

If you see a chart that resembles M, the pattern is a Double Top. The
characteristics of this pattern are:

1. There will be three lows in a line. (neckline)

2. There will be two peaks in-between the lows.

3. The price will break the neckline after the third low.

Double Top (M) Chart Pattern

M pattern denotes that the prices are going to fall further. (Maybe a time to
exit, You decide!)

4. Double Bottom (W-Shaped) Pattern

 If you see a W shaped chart, the pattern is a Double Bottom. This pattern is a
is a mirror image of M pattern. This pattern denotes the prices are going to
rise. Three aspects of this pattern are:

1. There will be three peaks in a neckline.

2. There will be two lows in between.

3. The price will break the neckline and move upwards.

Double Bottom (W) Chart Pattern

W pattern indicates a likely bullish trend – A reason to buy or at least hold a
stock.

5. Ascending Triangles
An ascending triangle is a variation of the symmetrical triangle. In an
ascending triangle, you will see following aspects:

1. The support line will move upwards.

2. The resistance line will be a fairly straight line.

Below is a simple diagram for you to understand easily.

 Ascending Triangle Pattern
At the end of an ascending triangle, a breakout is likely.

6. Descending Triangles
A descending triangle is a mirror reflection of the ascending triangle. Now, the
resistance will move downward while the support line will be straight.

Below is a simple diagram to help you understand easily.

Descending Triangle Pattern

At the end of a descending triangle, a breakdown is likely.

7. Rising Wedge
A wedge in many ways looks like an ascending triangle. In an ascending
triangle, the resistance will be straight. But in a wedge, the resistance too will
slope upward. Also, you will find that the interpretation is different. But first…

A stock chart pattern can be identified as a rising wedge, if you spot the
following characteristics.
1. The resistance line moves upwards.
2. The support line also moves upwards. And the support line slopes
more than the resistance line. In other words, support line tries to catch up
with the resistance line.

Rising Wedge Pattern

A rising wedge is seen as an indication of a breakdown in prices. Hence,
there will be a reversal of trend downwards.

8. Falling Wedge
A falling wedge pattern is in direct contrast with a rising wedge.

The characteristics are as follows:

1. The support line moves downwards.

2. The resistance line moves downwards as well. The resistance line will
slope more compared to the support line (in the downward direction).

Falling Wedge Pattern

 After a falling wedge, bullish days will follow. There will be a trend reversal in
the positive direction.

9. Bullish Flag
Flags are stock chart patterns that exist only for short durations (few weeks).
You can say a pattern is a bullish flag if you see the following characteristics:

1. A sharp price rise in less duration.

2. Following the sharp rise, the price oscillates between two downward
sloping trend lines. The lines will be more or less parallel.
3. At the end of the pattern, the price breaks the resistance and moves
upward.

Bullish Flag Pattern

After the end of a bullish flag, the trend will move in the positive direction.

10. Bearish Flag

A bearish flag pattern is a variant of a bullish flag. You will see the following
characteristics in this pattern.

1. A sharp price drop in less duration.

2. Following the sharp drop, the price oscillates between two upward
sloping and parallel trend lines.
3. At the end of the trend, the price breaks the support and moves in the
downward direction.
 Bearish Flag Pattern
After the end of a bearish flag, a bearish trend is likely.

11. Bullish Pennant

A pennant is very similar to the triangle patterns. The only difference is this. A
pennant exists relatively for very short durations compared to the triangles.

The characteristics are as follows:

1. A sharp price rise in short duration.

2. After the price rise, a brief pennant is formed by the trend lines as
shown in the diagram.
3. At the end of the pennant pattern, the price begins to rise.

Bullish Pennant Pattern

12. Bearish Pennant

Bearish Pennant is similar to bullish pennant with only one difference.
 You already know that a bullish pennant is preceded by a sharp price rise. But
a bearish pattern becomes visible after a sharp price drop.

Bearish Pennant Pattern

A bearish pennant is a continuation pattern. A sharp price drop is likely after
this pattern.

13. Triple Top

A triple top pattern is similar to head and shoulders pattern. The only
difference is that all the peaks will be at same level.

You will see the following aspects in a triple top pattern.

1. Three peaks at almost same levels.

2. Two lows in-between the three peaks.
3. After the third peak, prices drop and break down the support level.

Triple Top Pattern

A triple top is a reversal pattern when the prices begin to fall after consecutive
peaks.
 14. Triple Bottom
Triple bottom is an inverted triple top pattern.

The characteristics are:

1. Three lows at almost same levels.

2. Two peaks in between.
3. After the third low, the prices move upward and break the resistance
line.

Triple Bottom Chart Pattern

After a triple bottom, a bullish trend is likely.

15. Cup and Handle Pattern

Cup and handle pattern was first known to people through one of William
O’Neil’s books. Do you know who is William O’Neil? Well, he is none other
than the founder of Investor’s Business Daily. He is known for his extensive
research on stock chart patterns.

You can easily remember and identify a Cup and handle pattern. If you spot a
price chart looking like a cup with a short handle to the right, you have spotted
the pattern!

You will find below aspects in this pattern.

1. A shallow cup – Prices will fall from a peak and rise again to the same
level. The fall and rise will be smooth in a semi-circular path.
2. A short handle – The cup will be followed by a short handle.
3. At end of the handle, the price will break the previous high.
 Cup And Handle Chart Pattern
A cup and handle pattern denotes an upcoming bullish trend.

16. Symmetrical Triangles

To understand symmetrical triangles pattern, you should know what is a trend
line.

A trend line is one that connects all the peaks or all the lows. The line
connecting all the peaks is called a resistance line. Similarly, a line connecting
all the lows is called a support line.

A trendline can move in all three possible directions:

1. Upward
2. Downward
3. Straight

Now let us discuss symmetrical triangle pattern.

A symmetrical triangle is a rare phenomenon. Both the trendlines – support,

and resistance lines will move towards each other forming
a symmetrical triangle as shown in the below image.
 Symmetrical Triangle (Breakout) Pattern
Support line will be a mirror image of the resistance line. At the end of this
pattern, if the price breaks resistance a breakout is likely. But if the price
breaks the support line, a breakdown is likely.

Symmetrical Triangle Breakdown Pattern

17. Channel Down

The Channel Down pattern is identified when there are two parallel lines, both
moving down to the right across respective peaks (upper line) and bottoms (lower
line). The upper line is identified first, as running along the lows: it defines the
trendline. The lower line (or, the channel line) is identified as parallel to the trendline,
running across the first prominent bottom. When in the channel, prices are expected to
bounce off both upper and lower boundaries; the more such reversals occur, the more
reliable the pattern.

18. Channel Up

The Channel Up pattern is identified when there are two parallel lines, both moving
up to the right across respective peaks (upper line) and bottoms (lower line). The
lower line is identified first, as running along the lows: it defines the trendline. The
upper line (or, the channel line) is identified as parallel to the trendline, running across
the first prominent peak. When in the channel, prices are expected to bounce off both
upper and lower boundaries; the more such reversals occur, the more reliable the
pattern.