How to Read Stock Chart Patterns for Beginner Stock Traders

The common stock chart patterns used to trade stock that beginner stock trades should know are explained below. These stock chart pattern are grouped into reversal stock chart patterns & continuation stock trading chart patterns.

Reversal Stocks Trading Patterns

The commonly used stock reversal chart patterns are:

Double Tops

Double tops stock chart pattern is an M shaped two tops or two peaks pattern that forms on the stock price chart during a stock upward trend.

Double tops stock chart pattern is a bearish stock pattern that forms when stock price reaches a resistance level.

The stock price will move up & then dip slightly then turn up & move upward to the top level where it had reached or slightly below this level then move down again forming what is known as a double top stock chart pattern.

Double Bottoms

Double bottoms stock chart pattern is a W shaped two bottoms or two lows stock pattern that forms on the stock price chart during a stock downward trend.

Double bottoms stock pattern is a bullish stock pattern that forms when stock price reaches a support level.

The stock price will move down in then move upwards slightly then turn downward & move down to the bottom level where it had reached or slightly above this level then move upwards again forming what is known as a double bottom stock chart pattern.

Head & Shoulders Stock Trading Chart Pattern

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 stock 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 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 stock signal from this reverse head and shoulders pattern is confirmed once stock price moves above this neckline.

Continuation Stock Chart Patterns

Continuation stock trading chart patterns are:

Rising Wedge or Ascending Wedge

Rising wedge is a continuation stock pattern that forms during an upward stock trend & this stock patterns looks like a triangle stock consolidation pattern that has a rising slope that's heading upward.

Rising wedge chart pattern has rising sloping support and resistance levels and this stock pattern shows that stock prices keep moving higher and once stock prices move out of this rising wedge stock pattern the upward stock trend is likely to continue.

Falling Wedge or Descending Wedge

Falling wedge is a continuation stock pattern that forms during a downwards stock trend & this stock patterns looks like a triangle stock consolidation pattern that has a descending slope that is moving downward.

Falling wedge pattern has descending sloping support and resistance levels & this stock pattern shows that stock prices keep moving lower and once stock prices move out of this descending wedge stock pattern the downwards stock trend is likely to continue.

Bullish Pennant or Bearish Flag

Bullish Flag is a stock chart pattern with parallel support and resistance levels that forms during a stock upward trend and a stock continuation signal is generated when stock price moves above the bullish flag pattern & the upward stock trend continuation signal is generated by this continuation stock bullish flag pattern.

Bearish Pennant or Bearish Flag

Bearish Flag is a stock chart pattern with parallel support and resistance levels that forms during a stock downward trend and a stock continuation signal is generated when stock price moves below the bearish flag pattern & the downward stock trend continuation signal is generated by this continuation stock bearish flag pattern.

How to Read Stock Chart Patterns for Beginner Stock Traders