What are the different types of chart patterns?

There are thousands of chart patterns, but most generally fall under two broad categories—ccontinuation patterns and reversal patterns. Continuation patterns are often a pause in a trend and indicate that the trend direction before the pattern will continue after price breaks out of the continuation pattern.

What types of stock chart patterns are used in technical analysis?

There are two primary types of stock chart patterns used in technical analysis: continuation patterns and reversal patterns. Continuation patterns occur in the middle of an existing trend, signaling the continuation of a trend even after the pattern completes. Reversal patterns, on the other hand, signal change in the prevailing trend.

Why do traders use chart patterns?

Patterns provide logic to the price action, pointing to both breakouts and reversals. In particular, traders use chart patterns to identify price trends– valuable for forecasting future price behavior to determine profitable entry or exit points. They can be used to analyze all markets, including stocks, forex, cryptocurrencies, and commodities.

What are bearish chart patterns?

Bearish Chart Patterns Cheat Sheet Now onto some bearish patterns! Just like with the bullish patterns, bearish patterns are either signaling a reversal in a price trend, in this case, it would be reversing a strong upward trend; or, there is a brief correction in price, and a continuation pattern signals the price will continue its downtrend.