No matter where you are in your trading journey — beginner or expert — this guide will help you refine your strategy. Let’s break it down step by step:
1️⃣ Head and Shoulders 🧠
What it shows: Signals a trend reversal from bullish to bearish.
How to identify: Look for three peaks — the middle one (head) is the highest, with two lower ones (shoulders). Note if there is a break in the neckline.
Best strategy: Wait for the neckline to break to confirm the reversal.
Pro tip: Use volume analysis — analysis with higher selling pressure is more reliable.
2️⃣ Double Top 📉
What it shows: A bearish reversal at the end of an uptrend.
How to identify: The price hits resistance twice, forming two peaks, and then falls.
Best strategy: Enter a short trade after the support line breaks.
Pro Tip: Confirm the setup with the RSI showing overbought conditions.
3️⃣ Double Bottom 📈
What it shows: A bullish reversal at the end of a downtrend.
How to identify: Price tests support twice, creating two troughs, and then moves up.
Best strategy: Go long after the resistance level is broken.
Pro tip: Combine this with MACD divergence for stronger confirmation.
4️⃣ Triple Top 🔻
What this shows: A stronger bearish reversal.
How to identify: The price forms three peaks at similar levels before falling.
Best strategy: Short the market when the price closes below the support line.
Pro Tip: Larger timeframes (e.g. 4H, Daily) offer more reliable signals.
5️⃣ Triple Bottom 🚀
What this shows: A stronger bullish reversal.
How to identify: The price forms three lows at the same level and then rises.
Best strategy: enter long after breaking resistance.
Pro tip: Watch for the increase in volume during the breakout — this strengthens the signal.
6️⃣ Rounded top 🌀
What it shows: A slow bearish reversal.
How to identify: The price forms an arch-shaped curve, resembling an inverted bowl.
Best strategy: Short the market after breaking the support line.
Pro tip: Combine with decreasing volume for greater accuracy.
7️⃣ Rounding the bottom 🥏
What it shows: A gradual bullish reversal.
How to identify: The price forms an upward curve, similar to a bowl.
Best strategy: go long after resistance breaks.
Pro tip: This is often a precursor to longer-term uptrends, ideal for swing trading.
8️⃣ Cup and Handle ☕
What it shows: A continuation pattern leading to a bullish breakout.
How to identify: The price forms a U-shaped cup followed by a smaller handle before breaking out.
Best strategy: enter long after the indicator breaks.
Pro tip: The handle indentation to 50%-61.8% of the cup height is a prime entry point.
How to use these patterns effectively
🔍 Combine tools: use reversal patterns together with indicators like RSI, MACD or Bollinger Bands.
📏 Timeframes matter: Patterns on higher timeframes (e.g. 4H, Daily) are more reliable.
📊 Volume is key: Look for significant changes in volume to confirm reversals.
🚦 Risk management: Always set stop-loss levels at critical support or resistance zones.
