Chart Patterns - How to read them like a Pro

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Chart patterns are visual formations on price charts that help traders anticipate potential market movements.
These patterns fall into three main categories: bullish, bearish, and indecisive.

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1. Bullish Chart Patterns

Bullish patterns often signal that price is likely to move upward.

1.1 Bull Flag

• What it looks like: A sharp upward move followed by a small downward-sloping rectangle (the flag).
• Meaning: After a strong rally, the price consolidates briefly before continuing higher.
• Key insight: A breakout above the flag typically signals a continuation of the trend.

1.2 Pennant (Bullish)

• What it looks like: A strong upward move followed by a small symmetrical triangle.
• Meaning: Similar to the bull flag, but the consolidation takes a triangular form.
• Key insight: Once price breaks above the pennant, the uptrend often resumes.

1.3 Cup & Handle

• What it looks like: A “U”-shaped curve (the cup) followed by a small downward drift (the handle).
• Meaning: This pattern suggests a period of accumulation before price breaks higher.
• Key insight: A breakout above the handle signals the beginning of a new bullish leg.

1.4 Inverse Head & Shoulders

• What it looks like: Three low points, with the middle low being the deepest.
• Meaning: This reversal pattern appears after a downtrend and signals a potential change to an uptrend.
• Key insight: A breakout above the “neckline” confirms the reversal.