Chart Patterns - Complete Guide
Master all 16 chart patterns - Head & Shoulders, Double Top/Bottom, Triangles, Wedges, and more. Learn recognition and trading strategies.
Understanding Chart Patterns
Chart patterns are formations created by price movements over multiple candles that suggest future price direction. Unlike candlestick patterns (1-3 candles), chart patterns develop over many bars and provide larger trading opportunities.
GarudaAlgo Pattern Detection
GarudaAlgo automatically scans for all 16 chart patterns in real-time. Each pattern is validated against strict formation rules and assigned a reliability score based on volume, time in pattern, and breakout confirmation.
Pattern Categories
- Reversal Patterns: Signal the end of current trend (Head & Shoulders, Double Top/Bottom)
- Continuation Patterns: Signal trend will resume after pause (Flags, Pennants)
- Bilateral Patterns: Can break either direction (Triangles, Wedges)
Reversal Patterns
Head & Shoulders Reversal
Classic top reversal pattern
Three peaks with the middle (head) highest. The neckline connects the lows between peaks.
Trigger: Price breaks below neckline
Target: Neckline breakpoint - (Head height to neckline)
Inverse Head & Shoulders Reversal
Classic bottom reversal pattern
Three troughs with the middle (head) lowest. Signals potential upward reversal.
Trigger: Price breaks above neckline
Target: Neckline + distance from head to neckline
Double Top (M Pattern) Reversal
Bearish reversal
Two peaks at similar level forming an "M" shape. Second peak fails to break first.
Trigger: Break below the valley between peaks
Target: Breakdown point - pattern height
Double Bottom (W Pattern) Reversal
Bullish reversal
Two troughs at similar level forming a "W" shape. Second low holds support.
Trigger: Break above the peak between troughs
Target: Breakout point + pattern height
Triple Top/Bottom Reversal
Strong reversal
Three peaks or troughs at similar level. More reliable than double patterns.
Trigger: Break of the support/resistance
Significance: Each rejection strengthens the reversal signal
Rounding Top/Bottom Reversal
Slow reversal
Gradual curve in price creating a "saucer" shape. Indicates slow shift in sentiment.
Duration: Usually weeks to months
Signal: Slow but often powerful reversal
Continuation Patterns
Bull/Bear Flag Continuation
Strong continuation
Sharp move (flagpole) followed by consolidation channel (flag) against the trend.
Trigger: Breakout from flag in direction of pole
Target: Breakout point + flagpole length
Pennant Continuation
Strong continuation
Like a flag but with converging trendlines forming a small triangle after the pole.
Duration: Usually 1-3 weeks
Target: Measured move using pole length
Cup & Handle Continuation
Bullish continuation
U-shaped consolidation (cup) followed by small pullback (handle). Classic breakout pattern.
Trigger: Break above handle resistance
Target: Breakout + cup depth
Rectangle/Range Continuation
Pause pattern
Price bounces between horizontal support and resistance. Breaks in trend direction.
Trigger: Breakout above resistance or below support
Target: Rectangle height from breakout point
Bilateral Patterns (Can Break Either Way)
Symmetrical Triangle Bilateral
Direction uncertain
Converging trendlines with lower highs and higher lows. Coiling price = big move coming.
Bias: Usually breaks in direction of prior trend
Target: Triangle base width from breakout point
Ascending Triangle Bullish Bias
Usually bullish
Flat top resistance with rising lows. Buyers more aggressive each time.
Bias: 70% break upward
Target: Triangle height from breakout
Descending Triangle Bearish Bias
Usually bearish
Flat bottom support with lower highs. Sellers more aggressive each time.
Bias: 70% break downward
Target: Triangle height from breakdown
Rising Wedge Bearish
Usually bearish
Both trendlines slope up but converge. Shows weakening buying momentum.
Signal: Bearish - usually breaks down
Target: Wedge height from breakdown
Falling Wedge Bullish
Usually bullish
Both trendlines slope down but converge. Shows weakening selling momentum.
Signal: Bullish - usually breaks up
Target: Wedge height from breakout
Channel (Ascending/Descending) Trend
Trend pattern
Parallel lines containing price. Trade bounces within or breakouts from channel.
Trading: Buy at support, sell at resistance
Breakout: Channel width as target
Diamond Reversal
Rare reversal
Broadening formation followed by symmetrical triangle. Looks like diamond shape.
Rarity: Uncommon but powerful
Target: Diamond height from breakout
Elliott Wave Structure
Wave structure
5-wave impulse followed by 3-wave correction. Fractal pattern at all timeframes.
Correction: 3 waves against trend (A-B-C)
Rules: Wave 2 < Wave 1, Wave 4 < Wave 3
Trading Best Practices
- Wait for the breakout — Never trade before pattern completion
- Volume confirms — Breakout on high volume is more reliable
- Measure targets correctly — Pattern height from breakout point
- Use multiple timeframes — Confirm patterns on higher timeframes
- False breakouts happen — Use stops and wait for candle close confirmation
- Context matters — Patterns at key S/R levels are more powerful