{"id":10787,"date":"2023-05-10T02:43:32","date_gmt":"2023-05-10T02:43:32","guid":{"rendered":"https:\/\/www.wallstreetzen.com\/blog\/?p=10787"},"modified":"2025-11-07T23:08:46","modified_gmt":"2025-11-07T23:08:46","slug":"stock-chart-patterns","status":"publish","type":"post","link":"https:\/\/www.wallstreetzen.com\/blog\/stock-chart-patterns\/","title":{"rendered":"14 Stock Chart Patterns: How to Read Trading Chart Patterns"},"content":{"rendered":"\n<p>Traders don\u2019t have crystal balls. Stock chart patterns are the next best thing.<\/p>\n\n\n\n<p>Stock chart patterns (or crypto chart patterns) help traders gain insight into potential price trends, whether up or down. <\/p>\n\n\n\n<p>They are identifiable patterns in trading based on past price movements that produce trendlines revealing possible future moves. This approach is predominantly used in the charting and technical analysis space. <\/p>\n\n\n\n<p>Unlike crystal balls, different stock chart patterns are based on proven track records.<\/p>\n\n\n\n<p>While there are many different stock chart patterns, they are all used to help predict the direction of asset prices.<\/p>\n\n\n\n<p>In this article, I\u2019ll teach you all about stock chart patterns \u2014 we\u2019ll start with an education on the basics of stock charts and then progress to 14 chart patterns every trader should know.<\/p>\n\n\n    <div id=\"callout-box-block_93eea11ab529de6b9245187b513e503f\" class=\"callout-box promo\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon promo\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M21.41 11.58l-9-9C12.05 2.22 11.55 2 11 2H4c-1.1 0-2 .9-2 2v7c0 .55.22 1.05.59 1.42l9 9c.36.36.86.58 1.41.58.55 0 1.05-.22 1.41-.59l7-7c.37-.36.59-.86.59-1.41 0-.55-.23-1.06-.59-1.42zM5.5 7C4.67 7 4 6.33 4 5.5S4.67 4 5.5 4 7 4.67 7 5.5 6.33 7 5.5 7z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p><strong><em>The best charting app\/broker combo&#8230;<\/em><\/strong><\/p>\n<p>If you\u2019re looking for a stock charting app, there\u2019s a good chance that you\u2019re also looking for a broker. <a href=\"https:\/\/www.wallstreetzen.com\/go\/tradestation\" target=\"_blank\" rel=\"noopener nofollow\" data-wpel-link=\"exclude\">TradeStation<\/a>\u00a0has the best free charting software on the market \u2013 and if its proprietary charts aren\u2019t enough for you, it integrates fully with <a href=\"https:\/\/www.wallstreetzen.com\/go\/tradingview-pro\" target=\"_blank\">TradingView<\/a>! That means you can use TradeStation for your broker and make trades directly from a TradingView chart.<\/p>\n<p>But TradeStation\u2019s in-house charts shouldn\u2019t be overlooked. Its custom-built tools include:<\/p>\n<ul>\n<li><strong>Chart Analysis<\/strong> \u2013 a multi-function window where you can look up price data, perform technical analysis, back-test and automate strategies, and show orders and positions<\/li>\n<li><strong style=\"font-size: 16px;\">RadarScreen<\/strong><span style=\"font-size: 16px;\"> \u2013 one of the most specced-out stock screeners available, featuring alerts and real-time watchlists with 329 criteria built in <\/span><\/li>\n<li><strong style=\"font-size: 16px;\">Matrix<\/strong><span style=\"font-size: 16px;\">\u00a0\u2013 this takes all of the tools typically featured alongside charts (a market depth window, buy and sell signals, and an order-entry tool) and puts them into one window<\/span><\/li>\n<\/ul>\n<p><a href=\"https:\/\/www.wallstreetzen.com\/go\/tradestation\" target=\"_blank\">Sign up for TradeStation here.<\/a><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n    <\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h.98ahgsmah3da\"><strong>The 3 Types of Stock Charts<\/strong><\/h2>\n\n\n\n<p>We\u2019ve all seen it. Often in a Hollywood movie. Two, three, and even four-plus monitor workstations. Charts and numbers saturate the screens, refreshing every second. When you see this, you\u2019re likely looking at charting and technical analysis in action. <\/p>\n\n\n\n<p>While these charts can look intimidating to the uninitiated, they are much more accessible than you might think, even for beginners. Let\u2019s break it down:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h.tp5591m6le6h\"><strong>1. Line Chart<\/strong><\/h4>\n\n\n\n<p>When you Google a security like Apple (<a href=\"https:\/\/www.wallstreetzen.com\/stocks\/us\/nasdaq\/aapl\" target=\"_blank\" rel=\"noopener\">NASDAQ: AAPL<\/a>), you\u2019re likely to see a line chart pop up. It\u2019s the chart everyone and their grandma is familiar with. It\u2019s a simple representation of the price movement of a security through time.<\/p>\n\n\n\n<p>A stock\u2019s price is plotted on a chart at consistent increments and connected by straight lines. Typically, line charts use daily stock close prices.<\/p>\n\n\n\n<p>While broad trends can be observed, line charts don\u2019t necessarily provide much insight into patterns or trends. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><a href=\"https:\/\/www.wallstreetzen.com\/go\/tradingview-pro\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Screen-Shot-2023-05-09-at-2.29.14-PM.png\" alt=\"Screen shot 2023-05-09 at 2.29.14 pm\"\/><\/a><\/figure><\/div>\n\n\n<h4 class=\"wp-block-heading\" id=\"h.sugp3frf5rfw\"><strong>2. Bar Chart<\/strong><\/h4>\n\n\n\n<p>Bar charts bring more to the table than line charts. Like line charts, different increments can be used. With bar charts, however, you can see each period&#8217;s open, high, low, and close (OHLC). Bar chars do this by displaying a vertical line. <\/p>\n\n\n\n<p>The line spans the entire price movement for the day, from the low to the high. In addition, the open and close prices are also marked, which may or may not coincide with the day\u2019s high or low.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-31.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<p>Just like with line charts, as you zoom out, you begin to see the price action move through time. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><a href=\"https:\/\/www.wallstreetzen.com\/go\/tradingview-pro\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Screen-Shot-2023-05-09-at-2.32.25-PM.png\" alt=\"Screen shot 2023-05-09 at 2.32.25 pm\"\/><\/a><\/figure><\/div>\n\n\n<h4 class=\"wp-block-heading\" id=\"h.b67zyvow7s8n\"><strong>3. Candlestick Chart<\/strong><\/h4>\n\n\n\n<p>Serious traders favor candlestick charts, which are so named because they look like a candle with a wick protruding from both sides.<\/p>\n\n\n\n<p>Candlestick charts are similar to bar charts but go even further.<\/p>\n\n\n\n<p>Like bar charts, candlestick charts display the open, high, low, and close (OHLC) price. However, the body of a candlestick also shows information:<\/p>\n\n\n\n<ul>\n<li>White or green body: the close price is <strong>higher <\/strong>than the open price.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Black or red body: the close price is <strong>lower <\/strong>than the open price.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Horizontal line: the close price is <strong>unchanged <\/strong>from the open price.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-32.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<p>Insight into how a stock closed relative to its open price can offer unique insight into the sentiment of the security. <\/p>\n\n\n\n<p>For example, consecutive days of red or black (i.e., the stock closed lower than it opened for multiple days in a row) might imply a <strong>bearish <\/strong>sentiment.<\/p>\n\n\n\n<p>Alternatively, imagine a stock displaying green or white candlesticks for five days. In other words, the stock closed higher each consecutive day for five days. This could imply a <strong>bullish <\/strong>sentiment.<\/p>\n\n\n    <div id=\"callout-box-block_39dffacec5b27958646336cacdf847f6\" class=\"callout-box info\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon info\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M12 3c-.46 0-.93.04-1.4.14-2.76.53-4.96 2.76-5.48 5.52-.48 2.61.48 5.01 2.22 6.56.43.38.66.91.66 1.47V19c0 1.1.9 2 2 2h.28c.35.6.98 1 1.72 1s1.38-.4 1.72-1H14c1.1 0 2-.9 2-2v-2.31c0-.55.22-1.09.64-1.46C18.09 13.95 19 12.08 19 10c0-3.87-3.13-7-7-7zm2 16h-4v-1h4v1zm0-2h-4v-1h4v1zm-1.5-5.59V14h-1v-2.59L9.67 9.59l.71-.71L12 10.5l1.62-1.62.71.71-1.83 1.82z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p><em>It&#8217;s not just about charts&#8230;<\/em><\/p>\n<p>Stock moves don&#8217;t exist in a vacuum \u2014 they go hand in hand with the news cycle. <a href=\"https:\/\/www.wallstreetzen.com\/go\/benzinga\" target=\"_blank\" rel=\"noopener\">Benzinga Pro<\/a> provides an invaluable newsfeed that&#8217;s ideal for day traders due to its real-time newsfeed, audio squawk for live updates, and customizable stock screener that identifies trading opportunities.<\/p>\n<p>Additionally, the platform\u2019s Movers Tool highlights stocks with significant price changes, while real-time alerts on price spikes and unusual activity help you make informed decisions. Get started for FREE using the link below.<\/p>\n<\/div>\n    <\/div>\n\n\n\n<div class=\"is-layout-flex wp-block-buttons\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.wallstreetzen.com\/go\/benzinga\" target=\"_blank\" rel=\"noopener\">Get 2 weeks of Benzinga Pro FREE<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h.2uzs20rjsl9h\"><strong>14 Trading Chart Patterns:<\/strong><\/h2>\n\n\n\n<p>Below are some of the most popular and trusted stock chart patterns traders leverage today. For each stock chart pattern, I\u2019ve highlighted what direction they are used to confirm (i.e., bullish or bearish) and what type of pattern they are considered. <\/p>\n\n\n\n<p>As a refresher, here are the terms I\u2019ll use to describe the various patterns in trading.<\/p>\n\n\n\n<ul>\n<li><strong>Support Line<\/strong>: the price level at which a <em><strong>downtrend <\/strong><\/em>is expected to stop (bottom out) because of growing buyer demand.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li><strong>Resistance Line<\/strong>: the price level at which an <em><strong>uptrend <\/strong><\/em>is expected to stop (peak) because of growing seller supply.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li><strong>Neckline<\/strong>: another word often used in place of \u2018support line\u2019 or \u2018resistance line.\u2019<\/li>\n<\/ul>\n\n\n\n<ul>\n<li><strong>Breakout<\/strong>: when a security\u2019s price moves (\u201cbreaks out\u201d) above a resistance line or moves below a support line. <\/li>\n<\/ul>\n\n\n\n<ul>\n<li><strong>Continuation<\/strong>: A continuation pattern tells a trader that a price trend will likely persist.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li><strong>Reversal<\/strong>: A reversal pattern tells a trader that a price trend will likely reverse. <\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h.vncratcyb0uz\">1. Ascending Triangle<\/h4>\n\n\n\n<p><strong>Direction: <\/strong>Bullish<\/p>\n\n\n\n<p><strong>Type:<\/strong>&nbsp;Breakout, Continuation<\/p>\n\n\n\n<p>Ascending triangle trading chart patterns are some of the most widely used stock market patterns. They are considered bullish chart patterns that reveal to a trader that a breakout is likely to occur at the point where the triangle lines converge. <\/p>\n\n\n\n<p>The pattern forms as a stock repeatedly peaks at the resistance line, with increasingly higher lows. <\/p>\n\n\n\n<p>Over time, the price ranges the stock trades in narrows until the lines converge, indicating a breakout above the resistance line is likely to occur. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-33.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n    <div id=\"callout-box-block_c0a33dd07515ea1a4140ed8a81f12172\" class=\"callout-box info\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon info\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M12 3c-.46 0-.93.04-1.4.14-2.76.53-4.96 2.76-5.48 5.52-.48 2.61.48 5.01 2.22 6.56.43.38.66.91.66 1.47V19c0 1.1.9 2 2 2h.28c.35.6.98 1 1.72 1s1.38-.4 1.72-1H14c1.1 0 2-.9 2-2v-2.31c0-.55.22-1.09.64-1.46C18.09 13.95 19 12.08 19 10c0-3.87-3.13-7-7-7zm2 16h-4v-1h4v1zm0-2h-4v-1h4v1zm-1.5-5.59V14h-1v-2.59L9.67 9.59l.71-.71L12 10.5l1.62-1.62.71.71-1.83 1.82z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p>Want to know more about the ascending triangle pattern? <a href=\"https:\/\/www.wallstreetzen.com\/blog\/ascending-triangle-pattern\/\" target=\"_blank\" rel=\"noopener\">Check out this article<\/a>.<\/p>\n<\/div>\n    <\/div>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h.uk3lpwm6a65x\"><strong>2. Descending Triangle<\/strong><\/h4>\n\n\n\n<p><strong>Direction: <\/strong>Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>In contrast to chart patterns like the <a href=\"https:\/\/www.wallstreetzen.com\/blog\/ascending-triangle-pattern\/\" target=\"_blank\" rel=\"noopener\">bullish ascending triangle<\/a>, descending triangle stock market patterns are the bullish inverse. The stock\u2019s price repeatedly bottoms out at the support line, with increasingly lower highs until the lines converge, implying a breakout below the support line is likely.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-34.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.i0t9ojhx9782\">3. Symmetrical Triangle<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish or Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>Symmetrical triangle patterns are like ascending and descending triangles, but with one line sloping down and one line sloping up at roughly the equivalent angle. <\/p>\n\n\n\n<ul>\n<li>The signal is <strong>bullish <\/strong>if the stock price breaks out <strong>above <\/strong>the support line from below.<\/li>\n\n\n\n<li>The signal is <strong>bearish <\/strong>if the stock price breaks out <strong>below <\/strong>the resistance line from above. <\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-36.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.xo74y8syfa43\">4. Double-Top<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>A double-top is an easily identifiable charting pattern as it looks like a capital \u2018M.\u2019 After the asset price peaks twice at roughly the same price (the two peaks of the \u2018M\u2019), the assumption is that the price will fall, break through the below support line, and continue to fall further.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-37.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.buy9e9word2k\">5. Double-Bottom<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>A double-bottom is the opposite of a double-top. This pattern is similarly easy to identify, resembling a capital \u2018W.\u2019 <\/p>\n\n\n\n<p>After the asset price bottoms out twice at roughly the same price (the troughs of the letter \u2018W\u2019), the assumption is that the price will rise and break through the below resistance line and continue to appreciate further.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-38.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<p><\/p>\n\n\n\n<p>The <a href=\"https:\/\/www.wallstreetzen.com\/blog\/triple-bottom-pattern\/\" target=\"_blank\" rel=\"noopener\">triple bottom pattern<\/a> is more rare, but it&#8217;s one of the most bullish chart formations.<\/p>\n\n\n    <div id=\"callout-box-block_5832a2f2b6999d392eaf59afee58863d\" class=\"callout-box promo\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon promo\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M21.41 11.58l-9-9C12.05 2.22 11.55 2 11 2H4c-1.1 0-2 .9-2 2v7c0 .55.22 1.05.59 1.42l9 9c.36.36.86.58 1.41.58.55 0 1.05-.22 1.41-.59l7-7c.37-.36.59-.86.59-1.41 0-.55-.23-1.06-.59-1.42zM5.5 7C4.67 7 4 6.33 4 5.5S4.67 4 5.5 4 7 4.67 7 5.5 6.33 7 5.5 7z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p><strong>Crucial resources for traders<\/strong><!-- wp:paragraph --><\/p>\n<p><strong>Tools<\/strong><\/p>\n<ul>\n<li>Best charting software: <a href=\"https:\/\/www.wallstreetzen.com\/go\/tradingview-pro\" target=\"_blank\" rel=\"noopener\">TradingView Pro+<\/a><!-- wp:list-item --><!-- \/wp:list-item --><\/li>\n<li>Best trading computer: <a href=\"https:\/\/mt128.isrefer.com\/go\/dt\/EZTradingComputers\/\" target=\"_blank\" rel=\"noopener\">Radical X13 EZ Trading Computer<\/a><\/li>\n<\/ul>\n<p><!-- \/wp:list-item --><\/p>\n<p><!-- \/wp:list --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p><strong>Brokers<\/strong><\/p>\n<ul>\n<li>Best for beginners: <a href=\"https:\/\/www.wallstreetzen.com\/go\/etoro-sign-up?SubAffiliateId=blog-14-chart-patterns\" target=\"_blank\" rel=\"noopener\">eToro<\/a>*<!-- wp:list-item --><!-- \/wp:list-item --><\/li>\n<li>Best for advanced traders: <a href=\"https:\/\/www.wallstreetzen.com\/blog\/tradestation-review\/\" target=\"_blank\" rel=\"noopener\">Tradestation<\/a><\/li>\n<\/ul>\n<p><!-- \/wp:list-item --><\/p>\n<p><!-- \/wp:list --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p><strong>Education<\/strong><\/p>\n<ul>\n<li>Best overall day trading course: <a href=\"https:\/\/www.wallstreetzen.com\/go\/investors-underground\" target=\"_blank\" rel=\"noopener\">Investors Underground<\/a>\u00a0<!-- \/wp:list-item --><!-- wp:list-item --><\/li>\n<li>Real-time news: <a href=\"https:\/\/www.wallstreetzen.com\/go\/benzinga\" target=\"_blank\" rel=\"noopener\">Benzinga Pro<\/a><\/li>\n<\/ul>\n<p><!-- \/wp:list-item --><\/p>\n<p><!-- \/wp:list --><\/p>\n<\/div>\n    <\/div>\n\n\n<div class=\"wp-block-code-snippets-content\"><div class=\"disclaimer\">\r\n\t<p>eToro securities trading is offered by eToro USA Securities, Inc. (\u201cthe BD\u201d), member of FINRA and SIPC. Cryptocurrency is offered by eToro USA LLC (\u201cthe MSB\u201d) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. https:\/\/www.wallstreetzen.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and\/or the BD.<\/p>\r\n<\/div><\/div>\n\n<div class=\"wp-block-code-snippets-content\"><div class=\"disclaimer\">\r\n\t<p>eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.<\/p>\r\n<\/div><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.5cr2m6g6irpf\">6. Pennant<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish or Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>A pennant is a type of continuation pattern named such because it resembles a tapering flag, similar to the ones you might find flying on a ship at half-mast.<\/p>\n\n\n\n<ul>\n<li>A <strong>bullish pennant<\/strong>&nbsp;forms when an asset\u2019s price experiences a significant <strong>upward move <\/strong>(the flagpole). The asset then experiences a period of consolidation with converging trend lines (the pennant). Lastly, the breakout occurs in the same direction as the initial rapid price appreciation (the second half of the flagpole). <\/li>\n\n\n\n<li>A <strong>bullish pennant<\/strong>&nbsp;forms when an asset\u2019s price experiences a sizable <strong>downward <\/strong>move (the flagpole). The asset then experiences a period of consolidation with converging trend lines (the pennant). Lastly, the breakout occurs in the same direction as the initial rapid price appreciation (the second half of the flagpole). <\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-35.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.uvhjoq3ygjzp\">7. Flag<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish or Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>The flag pattern is similar to the pennant pattern, the only difference being the consolidation phase. Whereas with a pennant, the trend lines converge, with a flag, the trend lines remain <strong>parallel<\/strong>.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Like a pennant pattern, flag patterns can be either bullish or bearish. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-39.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.371wvnd3lbwm\">8. Wedge<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish or Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Reversal<\/p>\n\n\n\n<p>A wedge pattern is similar to an ascending or descending triangle. The only difference is that with ascending and descending triangles, the respective resistance and support lines are horizontal. With a wedge, the resistance and support lines are sloped. <\/p>\n\n\n\n<ul>\n<li>A <strong>rising wedge<\/strong>&nbsp;is considered <strong>bearish<\/strong>. It implies that a stock has been appreciating and is approaching a reversal. <\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-40.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<ul>\n<li>A <strong>falling wedge<\/strong>&nbsp;is considered <strong>bullish<\/strong>. It implies that a falling stock will likely reverse course and appreciate in value. <\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-29.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.h8cdozsd5jkn\">9. Rounding Top<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>A rounding top is typically considered a bearish signal. In this pattern, an asset&#8217;s price forms a dome (or an upside-down capital \u2018U\u2019) before breaking out from above the support line and dropping further. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-41.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.vggnxwrzt6p1\">10. Rounding Bottom<\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>A rounding bottom is typically considered a bullish signal. An asset&#8217;s price forms a rounded trough (a capital \u2018U\u2019) before breaking out from below the resistance line and further appreciating. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-42.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.vjrdf6oc7tsa\"><strong>11. The Spring<\/strong><\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish<\/p>\n\n\n\n<p><strong>Type:<\/strong>&nbsp;Reversal<\/p>\n\n\n\n<p>A spring forms when an asset\u2019s price moves below the support level but then rapidly reverses and moves back into the trading range. <\/p>\n\n\n\n<p>This is sometimes called a \u2018<strong>bear trap<\/strong>\u2019 since it looks like a stock might experience a large drop in price, but it doesn\u2019t subsequently materialize.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-43.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.11irkam9gw1v\"><strong>12. The Upthrust<\/strong><\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Reversal<\/p>\n\n\n\n<p>An upthrust is the opposite of a spring charting pattern. It occurs when the stock price moves above the resistance line but quickly reverses into the recent trading range. As a result, this is often termed a \u2018<strong>bull trap<\/strong>\u2019 since it appears like the asset price is set to appreciate.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-30.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.6yrw1yydc14j\"><strong>13. Cup and Handle<\/strong><\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Continuation<\/p>\n\n\n\n<p>A cup and handle is a continuation charting pattern that implies a stock is likely to form a bullish trend.<\/p>\n\n\n\n<p>It\u2019s similar to a rounding bottom pattern, but it includes the addition of what resembles a coffee mug handle. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-45.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.xorez9yeirmg\"><strong>14. Head and Shoulders<\/strong><\/h2>\n\n\n\n<p><strong>Direction: <\/strong>Bullish or Bearish<\/p>\n\n\n\n<p><strong>Type: <\/strong>Breakout, Reversal<\/p>\n\n\n\n<p>The head and shoulders pattern is named as such because the three peaks resemble two shoulders straddling a higher \u2018head.\u2019 <\/p>\n\n\n\n<p>After forming the three peaks, the stock is expected to fall further if it breaches the support line (or neckline) from above.<\/p>\n\n\n\n<p>Alternatively, an <a href=\"https:\/\/www.wallstreetzen.com\/blog\/inverse-head-and-shoulders-pattern\/\" target=\"_blank\" rel=\"noopener\">inverse head and shoulders<\/a> is the opposite and can indicate a bullish trend when the resistance line (or neckline) is crossed from below. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-46.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h.ux1aa2monf10\"><strong>How to Confirm Trading Chart Patterns<\/strong><\/h2>\n\n\n    <div id=\"callout-box-block_893c3c1d4f36142a90f38e482bbff9c4\" class=\"callout-box promo\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon promo\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M21.41 11.58l-9-9C12.05 2.22 11.55 2 11 2H4c-1.1 0-2 .9-2 2v7c0 .55.22 1.05.59 1.42l9 9c.36.36.86.58 1.41.58.55 0 1.05-.22 1.41-.59l7-7c.37-.36.59-.86.59-1.41 0-.55-.23-1.06-.59-1.42zM5.5 7C4.67 7 4 6.33 4 5.5S4.67 4 5.5 4 7 4.67 7 5.5 6.33 7 5.5 7z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p><a href=\"https:\/\/www.wallstreetzen.com\/go\/stockmarketguides\" target=\"_blank\">Stock Market Guides<\/a> helps traders find specific stock setups with a backtested edge by pairing technical signals with historical performance data. Each scan shows how similar setups have performed in the past, making it easier to filter for high-probability trades with confidence.<\/p>\n<p><strong><a href=\"https:\/\/www.wallstreetzen.com\/go\/stockmarketguides\" target=\"_blank\">Check out Stock Market Guides today<\/a><\/strong><\/p>\n<\/div>\n    <\/div>\n\n\n\n<p>A trading chart pattern can be confirmed once it fulfills the requirements of that particular pattern, including, for example, breaching a support or resistance line.<\/p>\n\n\n\n<p>For example, take the following pennant chart pattern. The pennant would not be considered \u201cconfirmed\u201d until the stock\u2019s price breaks above the top resistance line and forms the flagpole\u2019s top. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-35.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<p>Of course, some traders may enter a trader before a pattern is confirmed. This may help generate a more profitable trade, but it may come at the expense of less prediction accuracy.<\/p>\n\n\n\n<p>That is, just because a pennant chart pattern appears to be forming doesn\u2019t mean it necessarily will. Confirmation is simply a reflection of historical precedents. <\/p>\n\n\n\n<p>After all, these charting patterns have been used countless times by traders before us. These traders have made observations that have led to these patterns developing their reputation. If a pattern is confirmed, you can <em>expect <\/em>a particular price action based on the observations of those that came before us. <\/p>\n\n\n\n<p>When patterns aren\u2019t confirmed, the odds of an accurate prediction are lower. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2023\/05\/Untitled-44.png\" alt=\"Untitled\"\/><\/figure><\/div>\n\n\n<p>Regardless, while no pattern is perfect, they can offer general signals that can help improve trading.<\/p>\n\n\n\n<p>As a result, prudent traders don\u2019t necessarily rely on a single indicator or signal. Instead, they attempt to verify trends using numerous tools.<\/p>\n\n\n\n<p>Moreover, most traders will want multiple days of data before confirming any trend. <\/p>\n\n\n\n<p>Perhaps the most important part of chart pattern trading is obtaining experience. Over time, traders begin to improve at identifying patterns. This is especially true for those that stick to similar industries or stocks where they get exposure to the same assets repeatedly. <\/p>\n\n\n\n<p>Experience in a particular sector, for example, arms traders with knowledge about typical price action, volume, etc. These signals can be combined with charting patterns to further cement conviction. <\/p>\n\n\n    <div id=\"callout-box-block_f3c73182a27dacf5da6a2ff3025f49f6\" class=\"callout-box promo\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon promo\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M21.41 11.58l-9-9C12.05 2.22 11.55 2 11 2H4c-1.1 0-2 .9-2 2v7c0 .55.22 1.05.59 1.42l9 9c.36.36.86.58 1.41.58.55 0 1.05-.22 1.41-.59l7-7c.37-.36.59-.86.59-1.41 0-.55-.23-1.06-.59-1.42zM5.5 7C4.67 7 4 6.33 4 5.5S4.67 4 5.5 4 7 4.67 7 5.5 6.33 7 5.5 7z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p>The best way to learn and gain experience at the same time? Investors Underground.<\/p>\n<p><!-- wp:paragraph --><\/p>\n<p><a href=\"https:\/\/www.wallstreetzen.com\/go\/investors-underground\" target=\"_blank\" rel=\"noopener\">Investors Underground<\/a>\u00a0offers one of the most complete trading ecourses\u00a0out there.<\/p>\n<p><!-- \/wp:paragraph --> <!-- wp:paragraph --><\/p>\n<p>It\u2019s led by Nathan Michaud, a world-class trader and educator, who has built an impressive collection of stock trading courses and resources.<\/p>\n<p><!-- \/wp:paragraph --> <!-- wp:paragraph --><\/p>\n<p>As a <a href=\"https:\/\/www.wallstreetzen.com\/go\/investors-underground\" target=\"_blank\" rel=\"noopener\">member<\/a>, you get access to 1000+ videos, pre-market broadcasts, trade recaps, and IU\u2019s Live Trading Floor. IU also has a Trading Encyclopedia to teach new traders the basics of trading.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<\/div>\n    <\/div>\n\n\n\n<div class=\"is-layout-flex wp-block-buttons\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.wallstreetzen.com\/go\/investors-underground\" style=\"background-color:#446bca\" target=\"_blank\" rel=\"noopener\">Check out Investors Underground<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h.qb15l3580o02\"><strong>Final Word: Stock Chart Patterns<\/strong><\/h2>\n\n\n\n<p>To the uninitiated, stock chart patterns can seem daunting. Hollywood portrayals don\u2019t necessarily help \u2014 desk setups with five monitors may look intimidating. But it doesn\u2019t have to be that way.<\/p>\n\n\n\n<p>While these patterns do not guarantee future price movements, they can offer traders an additional edge to help increase the likelihood of successful trades and improve profitability. <\/p>\n\n\n\n<p>The more you leverage these charting patterns, the more valuable they will become. While understanding the theory is essential, nothing can replace the wisdom gained by working with these patterns directly. Check out the <a href=\"https:\/\/www.wallstreetzen.com\/blog\/best-charting-software\/\" target=\"_blank\" rel=\"noopener\">best stock charting software<\/a> to get started. <\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\t\t<div class=\"wp-faq-schema-wrap\">\n\t\t\t\t\t\t\t<h2>FAQs:<\/h2>\n\t\t\t\t\t\t<div class=\"wp-faq-schema-items\">\n\t\t\t\t\t\t\t\t\t<h3>What is the most profitable chart pattern?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>The Heat &amp; Shoulders pattern is often considered the most profitable trading chart pattern. <\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<h3>What is the most reliable stock pattern?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>The Head &amp; Shoulders pattern is considered the most reliable stock pattern, believed to have an 89% success rate.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<h3>What are the 3 types of stock charts?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>The 3 main types of stock charts are:<\/p>\n<p>Line charts<\/p>\n<p>Bar charts<\/p>\n<p>Candlestick charts<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<h3>Do stock chart patterns work?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>Yes, stock chart patterns work, but they are not infallible. Head &amp; shoulders chart patterns, for example, are believed to provide accurate direction the majority of the time. However, there are no guarantees.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<p>Traders don\u2019t have crystal balls. Stock chart patterns are the next best thing. Stock chart patterns (or crypto chart patterns) help traders gain insight into potential price trends, whether up or down. They are identifiable patterns in trading based on past price movements that produce trendlines revealing possible future moves. This approach is predominantly used [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":10768,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false},"categories":[22],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>14 Stock Chart Patterns: How to Read Trading Chart Patterns<\/title>\n<meta name=\"description\" content=\"Curious about identifying stock chart patterns and wondering where to start? This beginner&#039;s guide covers the basics of chart patterns, including their definitions, characteristics, and performance trends.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wallstreetzen.com\/blog\/stock-chart-patterns\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"14 Stock Chart Patterns: How to Read Trading Chart Patterns\" \/>\n<meta property=\"og:description\" content=\"Curious about identifying stock chart patterns and wondering where to start? 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