3/6/25, 11:20 PM 29 Chart Patterns Cheat Sheet - ForexBee

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29 Chart Patterns Cheat Sheet

Published by Ali Muhammad on January 28, 2024
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Introduction

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In the chart patterns cheat sheet, 29 chart patterns have been explained by expert trader.
These patterns have a high winning ratio because we have added proper confluences to
each pattern to increase the probability of winning in trading.

You can also learn each pattern in detail by clicking the learn more button below each
chart pattern.

What are chart patterns?

Chart patterns1 are visual representations of price movements in financial markets, like
stocks, currencies (forex), or commodities. These patterns are formed when prices on a
price chart create recognizable shapes or formations. Traders and analysts use these
patterns to predict future price movements and make trading decisions.

Types

Chart patterns are divided into two main categories:

1. Reversal Patterns: These patterns suggest that a current trend is likely to reverse
or change direction.
2. Continuation Patterns: These patterns suggest that the current trend is likely to
continue after a brief consolidation or pause.

List of 29 Chart Patterns

1. Megaphone Pattern

The Megaphone Pattern, also known as a broadening formation, is characterized by a

series of higher highs and lower lows that expand over time, resembling the shape of a
megaphone. This pattern reflects increasing volatility and can serve both as a continuation
and a reversal signal in the market.

Types and Forecast:

Bullish Megaphone: This variant forms when the price action breaks above the upper
boundary of the expanding channel. Traders often look for entry opportunities at the
completion of the fifth swing, anticipating a continuation of the uptrend.
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Bearish Megaphone: The bearish counterpart emerges when prices fall below the lower
trendline of the formation, suggesting a potential downward move. This offers a cue for a
short position at the breakdown point following the fifth swing.

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Learn More

2. Bullish Rectangle Pattern

The Bullish Rectangle Pattern is identified by a price consolidation phase where the price
moves sideways, bounded by parallel support and resistance levels, creating a
rectangular shape on the chart. This pattern signifies a pause in the prevailing trend, with
a potential bullish breakout indicating the continuation or reversal of the trend.

Types and Forecast:

Trend Continuation Rectangle: This type forms during an ongoing bullish trend and
signals that the trend is likely to resume after a period of consolidation. It is characterized

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by a series of equal highs and lows. Traders consider this a high-probability setup due to
its alignment with the existing bullish momentum.

Trend Reversal Rectangle: Occurs after a downtrend and suggests a potential reversal
to an upward trend. This pattern can be more challenging to trade due to the possibility of
false breakouts and requires careful confirmation, typically through a significant bullish
candlestick breakout, to validate the change in market sentiment.

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Learn More

3. Bump and Run Pattern

The Bump and Run Pattern, conceptualized by Thomas Bulkowski, is a two-phase chart
pattern that signals a potential price trend reversal. It starts with a lead-in phase (the trend
before the bump), followed by a bump phase (a sharp, unsustainable price move), and
concludes with the run phase (a trend reversal).

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Types

Bullish Bump and Run: Occurs after a bearish bump phase, indicating a bullish trend
reversal. The price breaks above the trendline established during the bump phase,
signaling the start of a new upward trend.

Bearish Bump and Run: Follows a bullish bump phase and signals a bearish trend
reversal. The price breaks below the trendline, suggesting a downward price movement is
imminent.

Learn More

4. Ascending Broadening Wedge Pattern

The Ascending Broadening Wedge is a bearish trend reversal pattern characterized by

expanding trendlines that diverge in an upward direction. The pattern consists of a series
of higher highs and higher lows, with the upper trendline serving as resistance and the
lower trendline acting as support. This pattern is indicative of increasing volatility and
uncertainty, leading to a potential downward reversal in price.

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Identification:

Starting Point: Begin by identifying a bullish trend that leads into the pattern,
setting the stage for a potential reversal.
Higher Highs and Higher Lows: Look for price action making progressively higher
highs and higher lows, indicative of an expanding wedge.
Trendlines: Draw two diverging trendlines that connect the series of higher highs
(resistance) and higher lows (support), outlining the broadening structure of the
wedge.
Wave Size: Each successive wave within the pattern should be larger than the
previous, emphasizing the expanding nature of the wedge.
Minimum Waves: Ensure that there are at least three identifiable waves within the
pattern to confirm its validity.

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Learn More

5. Descending Broadening Wedge Pattern

The Descending Broadening Wedge is a bullish trend reversal pattern characterized by an

expanding wave during a downward trend. This pattern signals a potential reversal to an
upward trend, highlighting a period of increasing market volatility and uncertainty as the
price makes progressively lower lows and lower highs.

Identification:

Starting Point: Look for a bearish trend leading into the pattern, which sets the
context for the potential bullish reversal.
Lower Lows and Lower Highs: Identify a series of lower lows and lower highs,
which indicate the expanding nature of the wedge.
Trendlines: Draw two diverging trendlines that connect the lower highs
(resistance) and the lower lows (support), creating the broadening wedge shape.
Wave Expansion: Each successive wave should be larger than the one before,
emphasizing the broadening aspect of the pattern.
Wave Count: Verify that there are at least three distinct waves within the pattern to
confirm its presence on the chart.

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Learn More

6. Ascending Channel Pattern

An Ascending Channel is a bullish chart pattern formed by two parallel upward-sloping

trendlines that encapsulate the price action. This pattern indicates a consistent bullish
trend in the market, where the lower trendline serves as support and the upper trendline
acts as resistance.

Identification:

Higher Lows: Start by identifying at least three consecutive higher lows, which
form the basis of the ascending channel’s support line.
Parallel Trendlines: Draw a trendline connecting these higher lows, then clone this
trendline and place it at the level of the higher highs to create the channel’s
resistance line.
Trendline Touches: The reliability of an ascending channel increases with the
number of touches or interactions price has with the trendlines. More touches
typically signify a stronger and more significant channel.
Swing Points: To accurately draw the channel, it’s crucial to pinpoint the correct
swing highs and lows. These points are where the trendlines should be anchored.

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Learn More

7. Descending Channel Pattern

The Descending Channel pattern is a bearish formation in trading, identified by two

parallel downward-sloping trendlines that connect the series of lower highs and lower
lows. This pattern indicates a prevailing bearish trend and can be utilized to identify both
trend continuations and reversals.

Identification:

Lower Lows: Begin by identifying at least three successive lower lows on the
chart, which will form the basis of the descending channel’s support line.
Parallel Trendlines: Draw a trendline through these lower lows, then replicate this
trendline to align with the lower highs, creating the channel’s resistance line.
Channel Integrity: Ensure that the price action remains within the confines of the
channel, without significant closes outside the channel’s boundaries, to maintain its

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validity.
Rejections: A robust descending channel is characterized by numerous rejections
from both the support and resistance lines, indicating the channel’s strength and
relevance.

Learn More

8. Trend Channels

Trend channels are graphical representations in forex trading that consist of two parallel
trendlines framing the price action. These channels illustrate the direction and volatility of
market trends, providing a structured view of bullish, bearish, or sideways movements.

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Types of Trend Channels:

Ascending Channel (Bullish Trend):

Formed by two parallel upward-sloping lines connecting higher highs and higher
lows.
Indicates a bullish market trend, with the upper line serving as resistance and the
lower line as support.
The trend is considered intact until a downward breakout occurs.

Descending Channel (Bearish Trend):

Consists of two parallel downward-sloping lines linking lower highs and lower lows.
Signifies a bearish trend, with the upper channel line acting as resistance and the
lower line as support.
The bearish trend is presumed to continue until an upward breakout happens.

Horizontal Channel (Sideways or Ranging):

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Characterized by two horizontal lines that connect the swing highs and lows,
indicating a lack of a clear bullish or bearish trend.
Represents a market in consolidation or a ranging phase, where the price oscillates
between the two horizontal levels.
Trading within a horizontal channel involves anticipating bounces off support and
resistance levels.

Learn More

9. Ascending Triangle Pattern

The Ascending Triangle pattern is a chart formation that can signal both continuation and
reversal trends, characterized by a flat upper trendline (acting as resistance) and an
upward-sloping lower trendline (acting as support), which converge to form a triangle. This
pattern indicates that buyers are more aggressive than sellers, as evidenced by the higher
lows.

Identification:

Base Formation: The upper side of the triangle, or the base, is formed by a
horizontal resistance line that has been touched by the price at least three times
without a significant breakthrough.
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Rising Trendline: The lower side of the triangle is an ascending trendline

connecting at least two higher lows, indicating increasing buying interest with each
price dip.
Swing Waves: The pattern should consist of clear, discernible swing waves, with
each successive low being higher than the previous one, reinforcing the ascending
nature of the lower trendline.
Wave Count: A valid Ascending Triangle pattern should have at least three swing
waves to confirm its presence.

Learn More

10. Symmetrical Triangle Pattern

The Symmetrical Triangle pattern is a chart formation that can serve as a continuation or
reversal signal, characterized by converging trendlines connecting a series of sequentially
lower peaks and higher troughs. This results in a triangle shape pointing sideways,

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indicating a period of consolidation where neither buyers nor sellers are in clear control,
leading to a narrowing price range.

Identification:

Wave Formation: For a pattern to be recognized as a symmetrical triangle, it must

consist of at least four waves, with each subsequent wave being shorter than the
previous, signifying a decrease in volatility and an impending breakout.
Key Levels: Ideal symmetrical triangles form at significant levels of support,
resistance, or within supply and demand zones, adding to the pattern’s
significance.
Converging Trendlines: Draw two trendlines – one connecting the lower highs
and the other connecting the higher lows. These trendlines should converge as the
pattern develops, creating a symmetrical appearance.

Learn More

11. Bearish Flag Pattern

The Bearish Flag pattern is a continuation chart formation seen in forex and stock trading,
characterized by a short, counter-trend consolidation phase that follows a sharp

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downward price movement, resembling a flag on a pole. This pattern indicates that the
current downtrend is likely to continue after a brief pause.

Identification:

Pole: The pole is formed by a steep, nearly vertical drop in price, representing the
initial impulsive wave of the bearish trend.
Flag: Following the pole, the flag consists of a slight, upward-sloping consolidation
phase, where prices retrace slightly within a narrow price range. This phase is
typically represented by parallel trendlines that slope against the prevailing
downtrend.

Learn More

12. Rounding Bottom Pattern

The Rounding Bottom pattern, often likened to the shape of the letter “U”, is a bullish trend
reversal pattern that gradually shifts the market sentiment from bearish to bullish. It is
characterized by a slow and steady decline followed by a stabilizing period and a

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symmetrical recovery to its initial starting point, forming a rounded trough in the price
chart.

Identification:

Location: This pattern typically forms at the bottom of a downtrend, marking a

gradual shift in market dynamics.
Shape: The ideal Rounding Bottom should have a smooth, rounded bottom that
mirrors the letter “U”. Sharp and V-shaped recoveries do not qualify as Rounding
Bottoms and are often indicative of different market dynamics.
Higher High: A significant indication of a trend reversal within this pattern is the
formation of a higher high following the completion of the “U” shape.

Learn More

13. Bull Flag Pattern

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The Bull Flag pattern is a bullish continuation chart pattern that appears during an
uptrend, consisting of a strong upward price move followed by a consolidating downtrend,
resembling a flag on a pole. This pattern indicates that the bullish trend is likely to
continue after a brief period of consolidation.

Identification:

Pole: The pole is formed by a sharp, vertical increase in price, representing the
initial impulsive wave of the bullish trend.
Flag: The flag portion is a short, downward-sloping consolidation phase that
follows the pole, often represented by a narrow channel of lower highs and lower
lows.

Learn More

14. Double Bottom Pattern

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The Double Bottom pattern, recognized for its resemblance to the letter “W”, is a bullish
reversal chart pattern that forms after a downtrend. It is characterized by two consecutive
troughs at a similar level, with a moderate peak in between, indicating potential reversal
from bearish to bullish momentum.

Identification:

Preceding Trend: The pattern typically follows a noticeable bearish trend,

establishing the context for a potential reversal. This initial downtrend is crucial for
the pattern’s validity.
Support Zone: The two troughs of the pattern are formed at a support zone, where
buying interest is strong enough to prevent the price from falling further, indicating
potential accumulation by bulls.
Neckline: The peak between the two troughs forms a resistance level known as
the neckline. A breakout above this level is often required to confirm the reversal
pattern.

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Neckline Breakout: The confirmation of the Double Bottom pattern comes with the
price breaking above the neckline, ideally on increased volume or strong bullish
momentum, signaling a shift in market sentiment from bearish to bullish.

Learn More

15. Double Top Pattern

The Double Top pattern, often referred to as the “M Pattern” due to its resemblance to the
alphabet “M”, is a bearish reversal chart pattern. It is characterized by the formation of two
consecutive peaks at approximately the same level, indicating a potential reversal from a
bullish to a bearish trend.

Identification:

Preceding Trend: A significant bullish trend should precede the formation of the
Double Top pattern. This establishes the context for a potential trend reversal.
Resistance Zone: The two peaks are formed at a resistance level, where selling
pressure overcomes buying pressure, preventing the price from advancing further.
Confirmation: The pattern is confirmed when the price drops below the support
level, often identified as the neckline, which is drawn at the lowest point between
the two peaks.
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Learn More

16. Triple Top Pattern

The Triple Top pattern is a bearish reversal chart formation characterized by three distinct
peaks at approximately the same level, followed by a neckline breakout that shifts the
market trend from bullish to bearish. This pattern is one of the classic chart patterns used
in technical analysis to signal a potential change in market direction.

Identification:

Preceding Trend: A Triple Top pattern typically forms after a prolonged bullish
trend, providing the context for a potential reversal.
Equal Peaks: The pattern is defined by three almost equal tops, with each peak
reaching a similar resistance level, indicating strong selling pressure at this price
point.
Resistance Zone: The resistance zone is established by the peaks and is a critical
area where the market has repeatedly failed to push prices higher.
Neckline: The neckline is drawn by connecting the lows between the three peaks.
This line acts as a support level that, once broken, confirms the pattern’s bearish
reversal signal.
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Learn More

17. AB=CD Pattern

The AB=CD pattern is a foundational harmonic chart pattern characterized by two price
legs (impulsive waves) of equal length, separated by a retracement wave. This pattern is
widely recognized for its simplicity and effectiveness in predicting price reversals in
technical analysis, with its structure closely tied to specific Fibonacci ratios.

Identification:

BC Retracement: The ‘BC’ wave should retrace to the 61.8% Fibonacci level of
the ‘XA’ wave, indicating a significant pullback but not a complete reversal of the
initial ‘AB’ leg.
CD Extension: The ‘CD’ wave is expected to extend to the 127.2% Fibonacci level
of the ‘BC’ wave, suggesting that the pattern completion and potential reversal area
coincide with significant Fibonacci extension levels.

Learn More

18. Descending Triangle Pattern

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The Descending Triangle is a chart pattern characterized by a flat lower trendline that acts
as support and a descending upper trendline that acts as resistance, creating a right-
angled triangle. Its role as a continuation or reversal pattern depends on its placement
within the broader market trend.

Identification:

Formation in Downtrend: When the Descending Triangle forms during a

downtrend, it is typically considered a continuation pattern, suggesting that the
downward trend is likely to persist following the pattern’s completion.
Formation in Uptrend: If the Descending Triangle appears at the peak of an
uptrend, it may serve as a reversal pattern, indicating a potential shift from bullish
to bearish sentiment.

Learn More

19. Triple Bottom Pattern

The Triple Bottom pattern is a bullish reversal chart formation characterized by three
distinct and equal lows followed by a breakout above a resistance level, often referred to
as the neckline. This pattern signals a potential shift from a bearish to a bullish trend in
forex or stock trading.

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Identification:

1. Preceding Bearish Trend: The pattern should be preceded by a clear bearish

trend, identified by consecutive lower lows and lower highs.
2. Equal Bottoms: Three distinct lows should form at approximately the same price
level, indicating strong support where the price finds buyers each time it dips.
3. Neckline Formation: The neckline is a resistance level formed by connecting the
high points between the three bottoms. A breakout above this level confirms the
reversal pattern.
4. Volume: Ideally, volume should decrease with each successive bottom and
increase significantly during the breakout, providing further confirmation of the
pattern’s validity.

Learn More

20. Diamond Pattern in Trading

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The Diamond Pattern is a complex reversal chart pattern characterized by a broadening

formation followed by a narrowing price range, forming a shape akin to a diamond. This
pattern signifies a potential reversal in the ongoing trend and suggests market indecision
before a clear directional move emerges. It is considered a reliable formation due to its
rarity and the significant shifts in supply and demand dynamics it represents.

Identification:

Formation Stages: The pattern is formed through two distinct phases: the
broadening phase (initial expansion of price range) and the narrowing phase
(subsequent contraction), which together create the diamond shape.
Broadening Pattern: Initially, the market expands with higher highs and lower
lows, resembling a megaphone or a broadening pattern, indicating increasing
volatility and uncertainty.
Narrowing Pattern: Following the broadening phase, the price action contracts
into a narrowing wedge or triangle, signaling a decrease in volatility and the
consolidation of prices.

Types of Diamond Pattern:

Diamond Top (Bearish Diamond Pattern): Forms after a prolonged uptrend and signals
a potential reversal to a downtrend. Key identifiers include formation in an overbought
condition and commencement after a bullish impulsive move, without prior sideways
movement.

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Diamond Bottom (Bullish Diamond Pattern): Develops following a downtrend and

indicates a possible shift to an uptrend. Look for formation in oversold conditions, initiation
after a bearish impulsive phase, and the absence of preceding sideways price action.

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Learn More

21. Wedge Chart Patterns in Forex

Wedge chart patterns are technical analysis tools that signal potential reversals in the
market trend. Characterized by converging trend lines, they indicate a diminishing
momentum in the current trend and are categorized into two types based on their
formation and the expected outcome.

Types of Wedge Pattern

Rising Wedge Pattern: A Rising Wedge2 is a bearish reversal pattern that forms during
an uptrend. It is characterized by higher highs and higher lows that converge towards a
point, creating a narrowing, upward-sloping shape.

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Falling Wedge Pattern: A Falling Wedge is a bullish reversal pattern that develops during
a downtrend. It features lower highs and lower lows that converge, forming a narrowing,
downward-sloping configuration.

Learn More

22. Cup and Handle Pattern in Forex

The Cup and Handle pattern is a bullish trend continuation chart pattern that visually
resembles a tea cup with a handle. This pattern suggests that, after a period of
consolidation or minor pullback within the handle, the price is likely to continue its previous
upward trend.

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There are two types:

Cup and handle pattern

inverted cup and handle pattern

Learn More

23. Pennant Pattern in Forex

The Pennant pattern is a trend continuation chart pattern often seen in forex trading,
characterized by a small symmetrical triangle that forms after a significant price
movement. The pattern resembles a pennant on a flagpole, with the initial price move
forming the pole and the consolidation forming the pennant.

Types of Pennant Patterns:

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Bullish Pennant Pattern:

Forms during an uptrend.

Wave A is a bullish impulsive move with higher highs and higher lows.
The breakout from the pennant is expected to be upward, continuing the bullish
trend.

Bearish Pennant Pattern:

Develops during a downtrend.

Wave A is a bearish impulsive move with lower lows and lower highs.
The breakout from the pennant is anticipated to be downward, perpetuating the
bearish trend.

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Learn More

24. Three Drives Pattern in Forex

The Three Drives pattern is a highly predictive reversal chart pattern found in forex
trading. It is characterized by a precise rhythm of three successive and symmetrical
moves (or “drives”) in a specific direction, each followed by a moderate retracement. In a
bullish trend, the pattern displays three consecutive higher highs, whereas in a bearish
trend, it shows three consecutive lower lows.

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Structure:

Drive 1: Begins the pattern with an impulsive wave, setting the direction of the
pattern (upward for bullish, downward for bearish).
Retracement of Drive 1: A partial pullback from the initial drive, typically adhering
to specific Fibonacci levels, often around 61.8%.
Drive 2: Mirrors the first drive in magnitude and direction, followed by a similar
retracement.
Drive 3: The final drive, which also resembles the first two in size and direction,
completes the pattern. This drive is often anticipated to reach a Fibonacci
extension of the previous retracement.

Learn More

25. Head and Shoulders Pattern

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The Head and Shoulders pattern is a highly regarded reversal pattern in forex trading,
characterized by two smaller price peaks (shoulders) flanking a larger peak (head). It
signifies a potential reversal from a bullish to a bearish trend.

Conversely, the Inverse Head and Shoulders pattern signals a potential reversal from
bearish to bullish, featuring two lower troughs surrounding a deeper central trough.

Learn More

26. Quasimodo chart pattern

The Quasimodo chart pattern that is formed after the formation of higher highs and lower
lows on the price chart of the currency in forex trading.

Types

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There are two types of Quasimodo or QM pattern:

Bullish QM pattern:

To identify the bullish Quasimodo pattern, follow the following guidelines:

1. Formation of HH and LL.

2. The last price low will act as left shoulder level.
3. After a higher high, the price will retrace to the left shoulder level and then it will
continue bullish trend.

Bearish QM pattern:

1. Formation of HH and LL.

2. The last price high will act as left shoulder level.
3. After a lower low, the price will retrace upward to the left shoulder level and
continue the bearish trend.

Learn More

27. Adam and Eve Chart Pattern

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The Adam and Eve chart pattern is a unique reversal pattern that combines V-shaped
(Adam) and U-shaped (Eve) formations to signal bullish or bearish market turns. Differing
from the classic double top/bottom, this pattern has a higher success rate and is identified
by its distinct shapes. Adam features a sharp, quick reversal, while Eve shows a more
gradual, rounded recovery or decline.

Types:

Bearish Adam and Eve Pattern:

Structure: Comprises an inverted V (Adam) followed by an inverted U (Eve),

indicating a shift from bullish to bearish sentiment.
Forecast: Suggests an impending bearish reversal, with sellers gaining market
dominance, leading to a potential bearish breakout.

Bullish Adam and Eve Pattern:

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Structure: Features a V-shaped Adam followed by a U-shaped Eve, diverging from

the classic W-shaped double bottom.
Forecast: Signals a bullish reversal, indicating that buying pressure is overcoming
selling pressure, often culminating in a bullish breakout.

Learn More

28. Dragon Pattern in Trading

The Dragon pattern is a distinctive “W” or “M” shaped reversal pattern that mirrors the
form of a Chinese dragon. This pattern signals a forthcoming price reversal, which can be
bullish or bearish based on the dragon’s shape. It’s a valuable indicator for traders looking
to anticipate market shifts.

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Types of Dragon Patterns:

Bullish Dragon Pattern:

Shape: Resembles a “W”.

Prior Trend: Bearish, indicating that the pattern forms after a downtrend.
Market Breakout: Leads to a bullish breakout, suggesting a shift towards a bullish
market sentiment.
Forecast: Indicates an increase in buying pressure, with buyers starting to
dominate the market.

Bearish Dragon Pattern:

Shape: Mirrors an “M”.

Prior Trend: Bullish, indicating the pattern forms after an uptrend.
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Market Breakout: Results in a bearish breakout, pointing to a growing bearish

sentiment.
Forecast: Suggests an uptick in selling pressure, with sellers gaining market
control.

Learn More

29. Dead Cat Bounce Pattern

The Dead Cat Bounce pattern is a temporary recovery in a declining market, resembling a
small bounce in prices, before the market resumes its prior downtrend. It’s a continuation
pattern that falsely hints at a reversal, making it a crucial concept for traders in both the
stock and crypto markets, particularly for those involved in swing and position trading.

Types:

Dead Cat Bounce: This occurs in a bearish trend where the market momentarily
recovers (bounces) before continuing its downward movement.
Inverted Dead Cat Bounce: The inverse scenario where, after a brief bearish
pullback in a bullish market, prices resume their upward trajectory, though less
common than the traditional dead cat bounce.
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Learn More

Conclusion
These chart patterns are widely used by retail traders in technical analysis.

I will highly recommend using these candlestick patterns as a confluencewith other

technical tools for profitable results.

Remember to backtest a single pattern at least 50 times to become a Pro trader.

1. Encyclopedia of Chart Patterns ↩︎

2. Chart Patterns By Bruce M. Kamich ↩︎

How to identify Fair Value Gap?

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Trading Chart Patterns PDF [FREE Download]

January 28, 2024

Do you want to get success in Trading?

Here's the Roadmap:

1. Learn supply and demand from the cheat sheet here

2. Get access the Supply & Demand Indicator here

3. Understand the fair value gap here

4. Use the set and forget strategy here

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5. Follow the risk management plan here

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1 thought on “29 Chart Patterns Cheat Sheet”

Kenneth
June 23, 2024 at 7:07 pm

Can you send me trading chart pdf guide please

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