BASIC

You want a clear explanation of chart patterns (the shapes/structures price makes on charts) that traders use to identify possible future price movements. Let me break them down into two big groups:


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📊 1. Continuation Patterns

👉 These suggest that the current trend (uptrend or downtrend) will likely continue.

🔹 Flag

Bull Flag → Appears in an uptrend. Sharp upward move (flagpole) followed by a small downward/sideways channel (the flag).

Bear Flag → Opposite, in a downtrend.


📌 Meaning: After the flag consolidation, price usually continues in the original direction.


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🔹 Pennant

Small symmetrical triangle after a strong move.

Shows temporary pause before trend continuation.


📌 Meaning: Breakout usually follows in the direction of the main trend.


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🔹 Rectangle

Price moves between parallel support & resistance levels.

Breakout usually happens in the direction of the prevailing trend.



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📊 2. Reversal Patterns

👉 These suggest that the current trend may reverse direction.

🔹 Head & Shoulders

Looks like a head with two shoulders.

Head & Shoulders Top → Reversal from uptrend to downtrend.

Inverse Head & Shoulders → Reversal from downtrend to uptrend.


📌 Key Level: The “neckline” → breakout confirms reversal.


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🔹 Double Top & Double Bottom

Double Top → Price tests resistance twice but fails, bearish reversal.

Double Bottom → Price tests support twice but fails, bullish reversal.



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🔹 Triple Top & Triple Bottom

Same as double but with three tests. Stronger reversal signal.



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🔹 Rounding Bottom (Saucer)

Price gradually shifts from downtrend to uptrend, looks like a "U" shape.

Very reliable for long-term reversals.



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📊 3. Neutral / Indecision Patterns

👉 These show uncertainty – direction is confirmed only after breakout.

🔹 Symmetrical Triangle

Price makes lower highs & higher lows (converging).

Breakout can happen either side.


🔹 Ascending Triangle

Flat resistance at top, higher lows forming.

Usually bullish breakout.


🔹 Descending Triangle

Flat support at bottom, lower highs forming.

Usually bearish breakout.



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✅ Summary for traders:

Continuation = Flag, Pennant, Rectangle.

Reversal = Head & Shoulders, Double/Triple Tops & Bottoms, Rounding Bottom.

Neutral/Indecision = Triangles.



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Would you like me to make a visual chart image with all these patterns drawn, so you can see how they look on real candlesticks?