The chart below shows an example of the double top. The double top pattern is confirmed when the price breaks below the valley formed between the two highs.
The price drops in a corrective way from the first high before a new failed retest of the first high happens. The double top pattern forms two distinctive highs at roughly the same price level. This means that the pattern leads to a decline in price, so we look for selling opportunities. The double top price formation is a reversal pattern that signals the potential end of an uptrend and a new downtrend.
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Without further ado, these are the chart patterns every trader should learn how to recognize. The below-mentioned patterns are some of the most popular chart patterns common with all financial markets.
Bullish chart patterns are a potential buy signal, whereas bearish chart patterns are a potential sell signal.īefore you start risking your money using patterns, it’s important to learn how to recognize them and get used to the different types of chart patterns. Examples of continuation patterns include the bullish and bearish pennant, flag pattern, or the ascending triangle.įurthermore, chart patterns can also be classified as bullish or bearish.