Chart patterns work because many traders see the same shapes and place the same orders. The edge comes from trading only well-formed patterns, waiting for the confirmation, and using the stop the pattern gives you.
Every pattern below has a natural invalidation point just beyond its structure, which makes the stop tight, and a measured move target based on the pattern height. A 20-pip stop with a 70-pip target is a 3.5R trade even if only four trades in ten win. Always confirm with a candle close, not a wick.
Two swing extremes at nearly the same price show that buyers (top) or sellers (bottom) failed twice. The neckline is the low between two peaks (or high between two troughs). Entry: a close through the neckline or its retest. Stop: beyond both extremes. Target: pattern height projected from the neckline. Fails when: the neckline break reverses, or the pattern forms inside a strong trend with no exhaustion.
Three swing highs where the middle one (the head) is clearly the highest and the outer two (shoulders) are similar. A line through the two troughs is the neckline, which may slope. Entry: a close below the neckline (above, for the inverse pattern). Stop: above the right shoulder. Target: head-to-neckline height projected down from the break. The inverse pattern is the same upside down and signals a bottom.
| Shape | Trendlines | Usual lean |
|---|---|---|
| Ascending triangle | Flat top, rising lows | Up |
| Descending triangle | Falling highs, flat bottom | Down |
| Symmetrical triangle | Falling highs, rising lows | Either |
| Rising wedge | Both rising, converging | Down |
| Falling wedge | Both falling, converging | Up |
Entry: a close at least 0.2 ATR beyond a trendline. Stop: back inside the pattern. Target: the widest part of the pattern projected from the breakout. Each line needs three touches to count.
A flag is a brief pause after a sharp move. The sharp move is the pole; the pause is a small channel that retraces no more than about half of it. Entry: a close beyond the flag in the pole direction. Stop: the far side of the flag. Target: the pole height projected from the breakout. Deep, messy pullbacks are not flags.
Choose Chart Patterns in the scanner. The tool finds the swing points, fits the lines, marks the pattern on the chart, and shows entry, stop, target, reward-to-risk and a checklist. It also reports "forming" patterns that have not yet broken out. It is analysis to learn from, not a trade signal.
Scan for chart patterns on any pair. Pick Chart Patterns and your trading style.
Open the Strategy Scanner →Risk notice: educational content, not financial advice. Leveraged trading carries a high risk of loss. Read our Risk Disclaimer.
