Types of Chart Patterns

Chart Pattern Types

Understanding and recognizing various Forex chart patterns is a crucial skill for any trader. Chart patterns can be broadly categorized into two types: Continuation Chart Patterns and Reversal Chart Patterns.

Continuation Chart Patterns

Continuation chart patterns are formed when a price trend pauses before resuming its original direction. These patterns indicate that the current trend is likely to continue. Examples of continuation chart patterns include triangles, flags, and pennants.

Continuation patterns indicate that the current trend is likely to continue after a period of consolidation. These patterns are formed when the price movement temporarily pauses and trades within a specific range. The most common continuation patterns are:

Triangle Pattern

Flag Pattern

Pennant Pattern

Reversal Chart Patterns

Reversal chart patterns are formed when a price trend changes direction. These patterns indicate that the current trend is likely to reverse. Examples of reversal chart patterns include head and shoulders, double tops, and double bottoms.

Reversal patterns indicate that the current trend is likely to reverse. These patterns are formed when the price movement reaches a significant level of support or resistance and is unable to continue in the same direction. The most common reversal patterns are:

Head and Shoulders Pattern

Double Top and Bottom Pattern

Island Reversal Pattern