Chart Patterns Complete Guide: Head and Shoulders, Triangles, Wedges

Chart Patterns Complete Guide: Head and Shoulders, Triangles, Wedges

Chart patterns are reusable price structures that repeat. This guide covers the most profitable patterns and how to trade them.

Reversal Patterns

Head and Shoulders

Pattern: Three peaks—left shoulder, head (taller), right shoulder (lower than head).

Meaning: The failure of the right shoulder to match the head shows weakening buying pressure. Reversal likely.

Trade: Short below the neckline (support line connecting the two shoulders).

Target: Neckline + (Head height) = Target profit level.

Double Top

Pattern: Price reaches resistance twice at similar levels, fails both times.

Trade: Short below the support between the two tops.

Double Bottom

Pattern: Price tests support twice at similar levels, bounces both times.

Trade: Long above the resistance between the two bottoms.

Continuation Patterns

Ascending Triangle

Pattern: Lower lows are getting higher (ascending line), but upper highs stay flat (flat resistance).

Meaning: Buyers are getting stronger. Eventual breakout up likely.

Trade: Buy above the resistance (flat line).

Descending Triangle

Pattern: Lower lows stay flat (flat support), but upper highs are getting lower (descending line).

Meaning: Sellers are getting stronger. Eventual breakdown down likely.

Trade: Short below the support (flat line).

Symmetrical Triangle

Pattern: Both highs and lows are converging toward a point (squeezing range).

Meaning: Consolidation. Breakout could be up or down. Volatility expansion likely.

Trade: Take the breakout in whichever direction it happens.

Pattern Stats

Head and Shoulders: 70% win rate (for reversals)

Triangles: 65% win rate (high volume breakouts)

Flags: 75% win rate (small continuation patterns)

Win rates improve when pattern is at a multi-timeframe confluence level.

Action Plan

Identify 2 current chart patterns on your trading pair. Track: Does the pattern play out as expected? What's the actual outcome vs the pattern prediction? Over 20 patterns, you'll understand which work best for your market.