Trade classical formations — triangles, flags, and head & shoulders — with precision.
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Overview
Chart patterns are recurring formations in price action that have been documented and studied since the early 20th century. They represent predictable behavioural cycles of market participants — accumulation, indecision, and resolution — and provide structured, objective trade setups with clear entry, stop, and target levels.
Continuation patterns suggest the existing trend will resume after a brief consolidation. Key types: Bull and Bear Flags (tight, parallel consolidation against the trend), Pennants (converging consolidation), Ascending and Descending Triangles (breakout in the direction of the flat side), and Rectangles (horizontal consolidation).
Reversal patterns signal a potential trend change. The most reliable: Head and Shoulders (three-peak structure with the middle peak highest, signalling bearish reversal), Inverse Head and Shoulders (bullish reversal), Double Top and Bottom (two failed attempts at an extreme), and Rounding Bottom (long-term bullish accumulation arc).
The "measured move" technique provides price targets: for most patterns, the target distance equals the height of the pattern projected from the breakout point. Volume is critical — genuine breakouts are accompanied by a significant surge in volume, confirming that new participants are entering in the breakout direction.
Strategy Code
This is a TradingView Pine Script strategy example for this page concept. Paste it into the TradingView Pine Editor, add it to your chart, and run it in the Strategy Tester.
//@version=6
strategy("Chart Pattern Trading Strategy", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript strategy example for this page concept. Open thinkorswim, create a custom strategy, paste the script, and apply it to your chart.
input fastLength = 20;
input slowLength = 50;
def fastMA = ExpAverage(close, fastLength);
def slowMA = ExpAverage(close, slowLength);
def buySignal = fastMA crosses above slowMA;Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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