No matter where you are in your trading journey, this guide will help you upgrade your strategies. Let’s simplify these patterns for quick understanding:
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1️⃣ Head and shoulders:
What it means: Indicates a reversal from an upward (bullish) trend to a downward (bearish) trend.
How to spot it: Three peaks: The middle peak (the head) is longer, with two smaller peaks on each side (the shoulders). Look for the neckline to break.
Best move: Sell (short sell) after the neckline is broken to the downside.
Pro tip 👇👇:
Watch for increased volume during a breakdown - it confirms a trend reversal.
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2️⃣ Double top:
What it means: Indicates the end of an uptrend and signals a bearish reversal.
How to identify it: The price hits a resistance level twice, forms two tops, and then declines.
Best move: Enter a sell trade when the support level is broken.
Pro Tip: Use indicators like the RSI to confirm overbought conditions for stronger signals.
3️⃣ Double bottom;
What it means: Indicates the end of a downtrend and an upward reversal.
How to identify it: The price bounces off the support level twice, forming two valleys, then rises.
Best move: Buy (enter a buy trade) after the resistance level is broken.
Pro tip: Use MACD divergence to confirm bullish momentum.
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4️⃣ The Triple Summit:
What does it mean: A stronger signal of a bearish reversal.
How to identify it: The price forms three tops at similar levels, then breaks to the downside.
Best move: Enter a sell trade when the price closes below the support level.
Pro tip: Use longer time frames to confirm this pattern for more reliable moves.
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5️⃣ Triple Bottom:
What does it mean: A stronger signal of a bullish reversal.
How to spot: The price forms three valleys at similar levels, then breaks out to the upside.
Best move: Buy after the price breaks the resistance level.
Pro Tip: Increased volume during a breakout confirms a strong trend reversal.
6️⃣ Round top:
What it means: Indicates a slow bearish reversal.
How to spot: The price curves downward like an inverted bowl, indicating weak momentum.
Best move: Sell the trade short when the support level is broken.
Pro Tip: This pattern is often accompanied by a drop in volume, which adds emphasis.
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7️⃣ Round bottom:
What it means: Indicates a slow bullish reversal.
How to spot: The price curves upward like a bowl, indicating increasing demand.
Best move: Enter a long trade after breaking the resistance level.
Pro Tip: Great for swing trades and often indicates long-term uptrends.
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8️⃣ Cup and handle:
What does it mean: Bullish continuation pattern leading to breakout.
How to spot: The price forms a U-shaped cup shape followed by a small dip (the handle) before breaking higher.
Best move: Long term entry after handle break.
Pro Tip: Wait until the handle pullback reaches 50%-61.8% of the cup height for an ideal entry.
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Maximize your success with these tips:
🔍 Combine Tools: Use patterns with indicators like MACD, RSI or Bollinger Bands for more confidence.
📏 Choose the right timeframe: Higher timeframes (4H, Daily) provide more reliable patterns.
📊 Focus on Volume: Strong reversals often come with noticeable shifts in volume.
🚦 Risk Management: Always set stop loss levels near key support/resistance points.
Mastering these patterns can transform your trading game. Practice, be disciplined, and you will see results.
Thanks for reading ❤
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