All terms
Recurring shapes traders use to anticipate what price might do next.
Patterns like triangles, flags, double tops and head and shoulders describe how a market consolidates before continuing or reversing. They work partly because so many people watch them.
No pattern is a prediction. Each is a setup with a trigger, an invalidation and a rough target, and a meaningful share of them fail.
Always define where the pattern is wrong before you enter. That level is your stop.
That a pattern predicts the outcome. It describes how supply and demand have resolved before, and it fails often. Its real value is that it defines the price at which you were wrong, which is what makes a stop possible.
Common questions
Are chart patterns reliable?
Why do patterns fail so often?
Where this comes up on the site
The guides that actually use this word, rather than a list of everything we have written.
Where to go next
More trading terms
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