How to Read Different Types of Stock Chart Patterns for Beginner Stock Traders

Continuation Stock Chart Patterns

Continuation Stock Chart Patterns

Pennant stock chart pattern is a continuation stock pattern that looks like a symmetrical triangle in shape & is drawn using support and resistance lines.

Pennant chart pattern occur during a stock trend - either upward stock trend or downwards stock trend. These pennant chart patterns signal consolidation periods of the stock price.

Bullish pennant stock trading pattern - occurs during an upward stock trend direction and this bullish pennant stock chart pattern shows that stock price has the potential to move upwards and continue in the overall upward stock trend direction.

Bearish pennant stock trading chart pattern - occurs during a downward stock trend direction and this bearish pennant stock chart pattern shows that stock price has the potential to move downwards and continue in the overall downward stock trend direction.

Continuation Stock Chart Patterns

Stock wedge chart patterns are continuation stock trading chart patterns.

Bullish wedge stock chart pattern - Rising Wedge, Ascending Wedge, Ascending Triangle is a bullish continuation stock chart pattern that signals stock prices are likely to continue moving upwards once stock prices move above this rising wedge stock chart pattern - ascending wedge stock chart pattern.

Bearish wedge stock chart pattern - Falling Wedge, Descending Wedge, Descending Triangle is a bearish continuation stock chart pattern that signals stock prices are likely to continue moving downwards once stock prices move below this falling wedge stock chart pattern - descending wedge stock chart pattern.

Continuation Stock Chart Patterns

Rectangle stock chart pattern is a stock trend continuation pattern & this pattern has horizontal support & resistance areas.

Bullish rectangle stock pattern - When a rectangle stock chart pattern forms during a stock upward trend it signals an upward stock trend move is likely to follow next once stock price breakout of this stock triangle chart pattern.

Bearish rectangle stock pattern - When a rectangle stock chart pattern forms during a stock downward trend it signals a downward stock trend move is likely to follow next once stock price breakout of this stock triangle chart pattern.

Reversal Stock Chart Patterns

Double Top Stocks Trading Chart Pattern

Double tops stock chart pattern is a reversal stock chart pattern that forms after a stock uptrend & this stock pattern forms two tops at approximately the same level.

Bearish Reversal Trading Signal - Double tops stock chart pattern is a bearish reversal stock trade signal.

Double Bottom Stocks Trading Chart Pattern

Double bottoms stock chart pattern is a reversal stock chart pattern that forms after a stock downtrend & this stock chart pattern forms two bottoms at approximately the same level.

Bullish Reversal Trading Signal - Double bottoms stock pattern is a bullish reversal stock trade signal.

Head & Shoulders Stock Trading Chart Pattern

Head & Shoulders chart pattern is a reversal stock pattern which forms at the top of an upward stock trend. Head & Shoulders chart pattern is a bearish reversal stock chart pattern that forms after a stock upward trend.

There is an initial peak which is the first shoulder then a slight dip in the stock price, then a second higher peak which is the head then another stock price dip followed by the last peak in stock price which is the second shoulder.

The lowest points between the two stock price lows forms the neck-line & the reversal stocks signal from this head and shoulders pattern is confirmed once stock price moves below this neckline.

Reverse Head & Shoulders Stocks Trading Chart Pattern

Reverse Head & Shoulders chart pattern is a reversal stock pattern that forms at the bottom of a downward stock trend. Reverse Head and Shoulders pattern is a bullish reversal stock chart pattern that forms after a stock downward trend.

There's an initial dip which is the first inverse shoulder then a slight peak in stock price, then a second lower dip which is the reverse head then another stock price peak followed by the last stock price dip in stock price which is the second inverse shoulder.

The highest points between the two stock price peaks forms the neckline & the reversal stocks signal from this reverse head and shoulders pattern is confirmed once stock price moves above this neckline.

Consolidation Stock Trading Patterns

Consolidation stock Chart patterns are also known as symmetric triangles - the consolidation pattern looks like a symmetrical triangle.

Symmetrical triangle stock chart pattern signal a consolidation in the stock price & a stock price breakout is likely to happen on either side once the stock price breaks out of this consolidation triangle stock chart pattern.

Stock traders will wait for the stock price to break out in one direction before opening a stock trade in direction of the stock price breakout.

Summary:

Continuation Stock Chart Patterns: Pennants - bullish pennant and bearish pennant, Wedges - Ascending wedge and descending wedges and Rectangles

Reversal Stock Chart Patterns: Double Tops, Double Bottoms, Head and Shoulders, Reverse Head and Shoulders

Consolidation Stock Chart Patterns: Symmetrical Triangles

How to Read Different Types of Stock Chart Patterns for Beginner Stock Traders