Skip to content
GetProfitable
Search
Dictionary

Chart pattern

A recognisable shape formed by price over many bars, such as a triangle or a double top, used as a rough description of how a market is behaving.

Chart patterns are the vocabulary of classical technical analysis: head-and-shoulders, double-top, bull-flag, symmetrical-triangle and dozens more. Each is a geometric description of a sequence of swing-highs and swing-lows, usually paired with a rule for entry, stop and target.

They are traditionally split into continuation-patterns, which suggest the prior trend resumes, and reversal-patterns, which suggest it ends. In practice the same shape often appears in both roles and only the outcome decides the label.

The published hit rates for named patterns come mostly from manual studies with subjective identification and survivorship problems, and independent replication is weak. Patterns are most defensible as a way to impose structure: they give you a defined level that says you are wrong, which is worth more than the forecast.

Related: continuation-pattern, reversal-pattern, failed-pattern, measured-move, technical-analysis

Educational only, not advice. Spotted an error? Post in Site Feedback.