Classic Price Patterns

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Volume Action: Tightening before Lightning
Tall & Compact perform better than Short & Flat Patterns

Technical Analysis observes that history repeats itself. Surprisingly, price patterns practically prove that under certain market conditions, traders & investors behave typically in the same manner. The forces that motivate price movement are dynamic, and the participants are dynamic, but patterns keep forming repeatedly in all the markets.

 

Trend lines
Inclining Trend line: A straight line usually drawn to define an uptrend against or through price bar lows.
Declining Trend line: A straight line usually drawn to define a downtrend against or through price bar highs.  
Support: A horizontal floor where interest in buying is strong enough to overcome the pressure to sell. Therefore a decrease in price is reversed and prices rise once again.  
Resistance: A horizontal ceiling where the pressure to sell is greater than the pressure to buy. Therefore, an increase in price is reversed and prices revert downward.  
Channels
Inclining Channels: The inclining channel is a formation with parallel price barriers along both the price ceiling and floor. Unlike the sideways channel the inclining channel has an increase in both the price ceiling and price floor.
Declining Channels: The declining channel is a formation with parallel price barriers along both the price ceiling and floor. Unlike the sideways channel the declining channel has a decrease in both the price ceiling and price floor.
Horizontal or Sideways: A horizontal or sideways is a formation that features both resistance and support. Support forms the low price bar, while resistance provides the price ceiling.
Triangles
Symmetrical Triangle: A formation in which the slope of price highs and lows are converging to a point so as to outline the pattern in a symmetrical triangle.  
Non-Symmetrical: A formation in which the slope of price highs and lows are converging to a point so as to outline the pattern in a non-symmetrical triangle.  
Ascending Triangle: A formation in which the slope of price highs and lows come together at a point outlining the pattern of a Right Triangle. The hypotenuse in an Ascending Triangle should be sloping from lower to higher and from left to right. Ascending triangles, with a prior downtrend, are anticipated to break down and out, rather than up and out.  
Descending Triangle: A formation in which the slope of price highs and lows come together at a point outlining the pattern of a Right Triangle. The hypotenuse in a Descending Triangle should be sloping from higher to lower and left to right. Descending triangles, with a prior uptrend, are anticipated to break up and out, rather than down and out.  
Pennants
Pennants: Similar to a Symmetrical Triangle but generally stubbier or not as elongated. A formation in which the slope of price bar highs and lows are converging to a point so as to outline the pattern in a symmetrical triangle.  
Wedges
Rising or Inclining Wedges: This formation occurs when the slope of price bar highs and lows join at a point forming an inclining wedge. The slope of both lines is up with the lower line being steeper than the higher one. Rising wedges, with a prior downtrend are anticipated to break down and out, rather than up and out.  
Falling or Declining Wedges: This formation occurs when the slope of price bar highs and lows join at a point forming a declining wedge. The slope of both lines is down with the upper line being steeper than the lower one. Falling wedges, with a prior uptrend, are anticipated to break up and out, rather than down and out.  
Flags
Bull Flag: A formation consisting of a small number of price bars where the slope of price bar highs and lows are parallel and declining. Bull Flags are identified by their characteristic pattern and by the context of the prior trend. In the case of a Bull Flag the trend leading to the formation of the Bull Flag is up.  
Bear Flag: A formation consisting of a small number of price bars in which the slope of price bar highs and lows are parallel and inclining. Bear Flags are identified by their characteristic pattern and by the context of the prior trend. In the case of a Bear Flag the trend leading to the formation of the Bear Flag is down.  
Top and Bottom Formations
1-2-3 (A-B-C) Top: Anticipates a change in trend from up to down on a break below the number 2 point.  
 1-2-3 (A-B-C) Bottom: Anticipates a change in trend from down to up on a break above the number 2 point.  
Head & Shoulders
Head and Shoulders Top: Anticipates a decline on a break below the Neckline.  
 Head and Shoulders Bottom: Anticipates a rise in prices on a break above the Neckline.  
 Double Top: Anticipates a change in trend from up to down.  
 Double Bottom: Anticipates a change in trend for down to up.  
 Triple Top: Anticipates a change in trend from up to down.  
 Triple Bottom: Anticipates a change in trend from down to up.  
 Rounded Top: Anticipates a change in trend from up to down.  
 Rounded Bottom: Anticipates a change in trend from down to up.  
Congestions
Generally refers to any type of chart pattern in which prices are temporarily trapped in a trading range. The range can be converging, expanding or defined by parallel lines on the horizontal. Congestions of shorter duration are usually found to be a variation of a Flag, or some variation of a converging or expanding triangle. Periods of longer congestion are usually defined by a variation of a converging or expanding triangle, or may be an elongated parallel channel on the horizontal. Such patterns are frequently referred to being Continuation patterns if price break out in the direction of the trend leading to the formation of the congestion pattern.  
Continuation Patterns
 Periods of longer congestion are usually defined by a variation of a converging or expanding triangle, or may be an elongated parallel channel on the horizontal. Such patterns are frequently referred to being continuation patterns if price break out in the direction of the trend leading to the formation of the congestion pattern.  
  Gaps
 Breakaway Gaps: Occur when prices gap higher or lower out of a congestion pattern in the direction of the prevailing trend.  
 Measuring or Running Gaps: Difficult to identify, but usually occur at the midpoint in a price rally or decline.  
 Exhaustion Gaps: Occur at the end of a market trend, usually after steep accelerated uptrend or downtrend. The gap can leave one price bar or a small number of congestive price bars behind.  
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