WHAT ARE PATTERNS?
In technical analysis, patterns are the distinctive formations created by the movements of security prices on a chart. A pattern is identified by a line that connects common price points, such as closing prices or highs or lows, during a specific period of time. Patterns are the foundation of technical analysis and analysts seek to identify patterns as a way to anticipate the future direction of a security’s price.
BULLISH PATTERNS:
Double Bottom
An extremely bullish technical reversal pattern that forms after an asset reaches a low price twoconsecutive times with a moderate decline between the two lows.
Ascending Triangle
A chart pattern that is created by the price being consolidated upwards by an uptrend and a level of resistance. Ascending triangles are generally considered continuation patterns.
Falling Wedge
A bullish reversal pattern that begins wide at the bottom and consolidates as prices move lower until it breaks out to the top side of the wedge.
NEUTRAL PATTERNS:
Symmetrical Triangle
A period of consolidation before the price is forced to breakout of breakdown. A breakdown from the lower trend line marks the start of a bearish trend, while a breakout from the topside indicates a bullish trend.
Pennant
A continuation pattern formed when there is a large movement followed by a period of consolidation with coverging trend lines, forming the pennant, followed by a breakout in the initial direction of the large movement.
BEARISH PATTERNS:
Double Top
An extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs.
Descending Triangle
A chart pattern that is created by the price being consolidated downwards by a downtrend and a level of support. Descending triangles are generally considered continuation patterns.
Rising Wedge
A bearish reversal pattern that begins wide at the top and consolidates as prices move higher until it breaks out to the bottom side of the wedge.