37 Patterns You Need to Know | RANKED by WIN RATES

Chart patterns represent the psychology of market participants, revealing moments when probability tilts in your favor.

Understanding these 37 patterns won't guarantee profits, but avoiding low-success patterns, learning to identify confirmation signals, and implementing risk management parameters will dramatically improve your trading edge.

This comprehensive guide covers every chart pattern worth knowing, from basic reversals to complex formations.

What Is a Double Top Pattern and How Do You Trade It?

Double Top Pattern is a chart formation where a security’s price rises to a high level twice, with a moderate decline in between, and signals a potential bearish reversal once it breaks below the intervening low.

The pattern resembles the letter “M” on a price-vs-time chart: a first peak (top), followed by a pullback that defines a support line (the “neckline”), then a second peak at approximately the same level as the first, and finally a decisive decline below the neckline which confirms the formation. 

Key features include:

• A preceding uptrend: the pattern appears after bullish movement and signals a possible trend change. 

• Two highs at roughly equal price levels. 

• A trough between them that forms the neckline/support level. Decreasing volume at the second peak and increased volume when the neckline breaks. 

📊 Data Point: In a multi-decade study of U.S. equities, Adam & Adam double tops averaged post-breakout declines of ~16% (1990s), 13% (2000s), and 12% (2010s) in bull markets. — Thomas Bulkowski, ThePatternSite

Chart Pattern Win Rates: Ranked by Performance and Average Move

What Is a Double Bottom Pattern and How Do You Trade It?

Definition
Double Bottom Pattern is a chart formation where a security’s price falls to a low level twice, with a moderate rebound between the two lows, and signals a potential bullish reversal when it breaks above the intervening high.

Visual Characteristics
This pattern resembles the letter “W” on a price‐vs‐time chart: a first bottom (trough), followed by a rebound to a peak (the neckline), then a second bottom at approximately the same level as the first, and finally a decisive rise above the neckline which confirms the pattern. Characteristics include:

• A preceding downtrend before the formation begins. 

• Two distinct lows at roughly the same price level (though exact equality is not required). 

• A peak between the two lows that defines the “neckline” or resistance level. 

• A breakout above the neckline, ideally on increased volume, confirming the pattern’s validity. 

• After the breakout, the expected price advance is often estimated by measuring the distance between the bottoms and the neckline and projecting that upward. 

📊 Data Point: Double bottoms produced an average rise of ~50% with ~72% of trades hitting their target. — Thomas Bulkowski, ThePatternSite

What Is a Bullish Flag Pattern and When Does It Break Out?

Bullish Flag Pattern is a technical-chart formation where a strong upward move (flagpole) is followed by a sideways or mildly downward sloping consolidation (flag) and then a breakout upward, signalling potential trend continuation.

It begins with a sharp rise in price (the flagpole) showing strong buyer momentum. Then price enters a corrective phase, forming a narrow channel or rectangle that often slopes downward slightly (the flag) while volume diminishes. Finally, price breaks above the upper trendline of that channel and the flagpole’s vertical height is often used to set a price target. 

📊 Data Point: Bullish flags succeed roughly 67–70% of the time when breakouts occur on rising volume. — Quantified Strategies Backtest Team (2023)

What Is a Bearish Flag Pattern and How Do You Spot It?

The Bearish Flag Pattern is a continuation chart formation where a sharp decline (flagpole) is followed by a narrow upward or sideways consolidation (flag) and a subsequent breakdown below the flag’s lower boundary, signalling that the prior downtrend is likely to resume.

Visual Characteristics
The pattern begins with a steep and rapid drop in price — this forms the “pole” and represents strong selling pressure. Then the price enters a consolidation phase forming the “flag”, typically a narrow channel or rectangle that slopes upward slightly or moves sideways against the preceding trend. Trading volume often decreases during this consolidation. Finally, the price breaks down below the lower trend-line of the flag with rising volume, confirming continuation of the downtrend.

📊 Data Point: A rule-driven bear-flag strategy produced statistically significant short-side profits across multiple equity indices. — Quantified Strategies Backtest Team (2023)

What Is a Symmetrical Triangle Pattern and What Signals a Breakout?

A Symmetrical Triangle Pattern is a chart-formation where two trend-lines converge—one descending from lower highs and one ascending from higher lows—creating a triangular shape before a breakout.

This pattern appears when price action shows a series of lower peaks and higher troughs, with the two trend-lines narrowing as the pattern develops. The upper trend-line slopes downward, the lower trend-line slopes upward, and both converge toward an apex. Volume typically declines during the formation, and a breakout (either upward or downward) is often accompanied by a surge in volume. The symmetrical triangle does not inherently signal direction; instead, it denotes consolidation and equilibrium between buying and selling pressure. Breakouts tend to occur somewhere between one-half to three-quarters of the way through the pattern’s lifespan.

📊 Data Point: AI-assisted testing found triangle breakouts succeeded ≈ 67–88% depending on symmetry and volatility regime. — Barchart Research Lab (2024)

What Is a Rectangle Pattern and How Do You Trade the Breakout?

A Rectangle Pattern is a technical chart formation where price trades between two roughly horizontal parallel lines of support and resistance, representing consolidation before a breakout.

The pattern consists of two horizontal boundaries: an upper resistance line connecting repeated highs and a lower support line connecting repeated lows. Price oscillates within this range for a period, forming a rectangle-shaped box on the chart. Volume typically diminishes during the consolidation phase and then expands once price breaks out of the rectangle. Whether the breakout is upward or downward determines whether the prior trend is likely to continue or reverse

📊 Data Point: High-scoring rectangles yielded ~55% average gains versus ~10% for poorly formed ones. — Thomas Bulkowski, ThePatternSite

What Is the Volatility Contraction Pattern (VCP) and How Do You Trade It?

The Volatility Contraction Pattern (VCP) is a chart-formation where a security in an up-trend undergoes successive pull-backs of decreasing magnitude and activity until it breaks out upward on increased demand.

The pattern begins after a strong advance and features several rounds of sharp decline, then progressively smaller pull-backs (for example a 15 % drop followed by a 10 % drop then a 5 % drop), each pull-back confined within a tighter trading range so the highs and lows converge. 

Volume typically declines during each contraction as selling pressure diminishes, reflecting reduced supply of shares. 
Finally a breakout occurs above the pivot or resistance from the tightest consolidation, ideally on a surge in volume — this move signals demand overwhelming supply and often initiates the next leg up.

📊 Data Point: Empirical trader studies report 60–70% breakout success when accompanied by volume expansion. — TraderLion Research & Mark Minervini (2023)

What Is a Bullish Pennant Pattern and How Do You Trade It?

Bullish Pennant is a short-term continuation pattern featuring a sharp upward move (the “flagpole”) followed by a small symmetrical triangle consolidation, which is then resolved by a breakout upwards.

The pattern starts with a strong uptrend that creates the flagpole segment. After this surge, price enters a consolidation phase where highs and lows converge, forming a triangular shape bounded by two trend-lines that narrow over time. During the consolidation, trading volume typically diminishes. The pattern completes when price breaks out above the upper trend-line of the pennant, preferably with a volume increase, and the projected move often equals the height of the flagpole added to the breakout point.

📊 Data Point: Upward pennant breakouts achieved their measured-move targets ~60% of the time. — Thomas Bulkowski, ThePatternSite

What Is a Bearish Pennant Pattern and When Does It Fail?

A Bearish Pennant Pattern is a chart-formation where a sharp downward move (“flagpole”) is followed by a brief symmetrical-triangle consolidation, then a breakdown continuing the prior decline.

The pattern begins with a flagpole, which is a steep, strong drop in price indicating heavy selling. Next comes a consolidation phase during which price moves in a narrowing range bounded by two converging trend-lines (one downward-sloping, one upward-sloping) forming a small triangle. Volume typically decreases during this consolidation. Then, a breakout to the downside (often accompanied by increased volume) confirms the pattern and signals continuation of the prior down-trend.

📊 Data Point: Downward pennant breakouts hit their targets only ~51%, showing reduced reliability versus bullish counterparts. — Thomas Bulkowski, ThePatternSite

What Is a Measured Move Up Pattern and How Do You Target It?

The Measured Move Up pattern is a chart-formation that is a three-leg upward movement where the second rising leg approximately mirrors the first in magnitude and time.

In appearance the pattern begins with an impulsive rally (leg 1) from a low point A to a high point B, followed by a corrective pull-back from B down to C, and then a second rally from C to D whose height and duration are roughly equal to the AB move.

📊 Data Point: Average first leg +36%, correction −48%, second leg +31%; ~60% met full measure-rule objectives. — Thomas Bulkowski, ThePatternSite

What Is a Rising Channel Pattern and How Do You Trade It?

The Rising Channel Pattern is a chart pattern in which an asset’s price moves between two upward-sloping parallel trend lines, one connecting higher lows (support) and the other connecting higher highs (resistance), indicating a generally bullish trend.

The pattern shows a clear sequence of higher highs and higher lows, forming two nearly parallel upward-tilted lines on the chart: the lower line links the swing lows and acts as support, while the upper line links the swing highs and serves as resistance.
Within this channel, price often oscillates between the two lines, bouncing off the lower support line and then retreating from the upper resistance line. 
If price breaks above the upper line, it signals a possible acceleration of the upward trend; if it breaks below the lower line, it may signal a reversal or weakening of the trend. 

📊 Data Point: Systematic channel-breakout tests achieved positive expectancy with disciplined re-entry rules. — Quantified Strategies Backtest Team (2022)

What Is a Falling Channel Pattern and When Does It Reverse?

The Falling Channel Pattern is a bearish continuation or reversal chart formation in which prices oscillate between two downward-sloping parallel trendlines, one marking lower highs (resistance) and the other lower lows (support).

Visually, the pattern shows a series of peaks and troughs declining in succession, with each swing high lower than the previous and each swing low likewise lower — both boundaries slope downward and remain roughly parallel. The upper line connects the lower highs and acts as resistance; the lower line connects the lower lows and provides support.  When price remains inside the channel, it often bounces between the two lines; a breakout below the lower line tends to signal continuation of the downtrend, whereas a breakout above the upper line can signal a potential reversal. 

📊 Data Point: Price-channel systems win ≈ 35% of trades but maintain ~2.4 : 1 reward-to-risk, yielding long-term profit. — Quantified Strategies Backtest Team (2022)

How Do You Identify an Ascending Triangle Pattern?

An Ascending Triangle Pattern is a chart formation where price moves between a flat resistance line and a rising support line, with higher lows and similar highs, often preceding a breakout.

The pattern is defined by two key trend-lines: one horizontal line connecting multiple similar swing-high peaks (resistance) and one upward-sloping line connecting successively higher lows (support). The price oscillates between these lines, forming a triangle shape that narrows as it approaches the apex. Volume often declines during the consolidation phase and typically expands at the breakout above the resistance line.

📊 Data Point: Ascending triangles averaged 17%, 11%, and 11% rises across the 1990s-2010s in bull markets. — Thomas Bulkowski, ThePatternSite

How Do You Identify a Descending Triangle Pattern?

A Descending Triangle Pattern is a chart-formation where price forms a flat horizontal support line and a descending resistance line of lower highs, often further downward movement.

The pattern features a horizontal lower trend-line connecting multiple similar lows, and a sloping downward upper trend-line connecting successive lower highs, creating a triangular shape that narrows over time. Volume typically decreases during formation and then increases upon the breakout (usually downward) when the support line is breached

📊 Data Point: Descending triangles averaged 16%, 14%, and 16% declines over the same periods. — Thomas Bulkowski, ThePatternSite

What Is a Wedge Pattern (Rising vs. Falling)?

A Wedge Pattern is a chart-formation where price action consolidates between two converging trend-lines that both slope in the same direction, signaling a potential trend reversal or continuation.

In a wedge, both boundary lines tilt either upward (rising wedge) or downward (falling wedge). For a rising wedge, both highs and lows trend upward while the range narrows, indicating weakening momentum ahead of a likely downside breakout.  For a falling wedge, both highs and lows trend downward while the range contracts, pointing to potential upside breakout as selling pressure diminishes.  Volume typically decreases during formation and then expands at breakout, enhancing validity.

📊 Data Point: Tall wedges showed stronger outcomes: rising wedges (down) ~18.7% height, falling wedges (up) ~15.9%. — Thomas Bulkowski, ThePatternSite

What Is a Rising Wedge Pattern and Why Is It Bearish?

The Rising Wedge Pattern is a chart-formation in which price moves higher between two upward-sloping converging trend-lines, signalling an impending downward breakout.

In this formation both the upper resistance line and lower support line slope upwards, but the support line rises more steeply than the resistance line, causing the trading range to contract. Volume typically declines during the formation as buying momentum weakens. When price breaks below the lower support trend-line (often with a volume uptick) the pattern is confirmed, pointing to a potential bearish move

📊 Data Point: Rising wedges typically break down for mid-teen percentage declines. — Thomas Bulkowski, ThePatternSite

What Is a Falling Wedge Pattern and When Does It Break Up?

A Falling Wedge Pattern is a chart-formation where price moves lower between two downward-sloping converging trend-lines, typically signalling a bullish breakout.

In this pattern both the upper resistance line and the lower support line slope downward, and they converge as the price range narrows. The upper line connects a series of lower highs; the lower line connects progressively lower lows but at a lesser slope, causing the lines to meet. Volume often declines during the wedge’s formation, reflecting weakening selling pressure. A breakout above the upper trend-line (often with increased volume) confirms the pattern, indicating a potential upward move.

📊 Data Point: Falling wedges (bullish) deliver average rises ≈ 17–18% after confirmation. — Thomas Bulkowski, ThePatternSite

What Is a Cup and Handle Pattern and How Do You Confirm It?

The Cup­-and-Handle pattern is a bullish continuation chart-pattern where a price advance (uptrend) pauses and forms a rounded “cup” shape followed by a smaller consolidation “handle”, and then breaks out above the cup’s rim.

Visually the pattern presents two distinct parts: the “cup” forms as a U-shaped decline and recovery back to the previous high, resembling a bowl or teacup; then the “handle” appears as a short shallow pull-back or sideways drift, often a downward-sloping channel or consolidation near the cup’s rim; the breakout occurs when price moves above the handle’s resistance accompanied by increased volume. 

📊 Data Point: About 47% of cup-with-handle breakouts retrace significantly; ~23% gain ≤ 15% before reversing. — Thomas Bulkowski, ThePatternSite

What Is a High-Tight Flag Pattern and Why Does It Work?

The High-Tight Flag pattern is a bullish continuation chart pattern that occurs when a stock surges rapidly, then consolidates tightly near its highs, and finally breaks out to extend the strong move.

Visually, the pattern begins with a very steep, nearly vertical rise (“pole”) — typically the stock doubles (100 %+ gain) within about 4-8 weeks.  After this strong advance, the price enters a short consolidation phase (“flag”) that is shallow (often a 10-25 % pull-back or less) and tight in range, lasting just a few weeks.  During this flag, volume tends to drop, showing lack of selling pressure, and the consolidation often slopes slightly downward or is flat. After the flag, the stock breaks out above the consolidation, typically on increasing volume, resuming the prior uptrend

📊 Data Point: Median pole rise ≈ 53% over ~63 days, reflecting extreme momentum characteristics. — Thomas Bulkowski, ThePatternSite

What Is a Flagpole Pattern and How Does It Set Up Breakouts?

The Flagpole Pattern is a chart-formation that is a sharp initial price move (“flagpole”) followed by a brief consolidation (“flag”) and a subsequent breakout continuing the trend.

Visually the pattern begins with a strong, impulsive move upward (or downward for a bearish version) forming the flagpole, then the price enters a tight range or mild retracement that slopes counter to the initial move (forming the flag rectangle), and finally the price breaks out in the same direction as the flagpole, ideally on increased volume. 

📊 Data Point: Flagpoles typically rise ~53% in ≈ two months, forming the structural base for high-tight flags. — Thomas Bulkowski, ThePatternSite

What Is the Bump and Run Reversal (BARR) Pattern?

The Bump and Run Reversal (BARR) pattern is a three-phase reversal chart formation with a lead-in trendline, a sharp “bump” deviation, and a breakout and “run” in the opposite direction.

Visually the pattern begins with a steady trend (lead-in) where price moves fairly smoothly along a moderate slope; then the bump phase shows a sudden steep acceleration away from that trendline (often with high volume) creating a bulge; finally in the run phase the price breaks the original lead-in trendline and moves strongly in the reverse direction of the prior trend.

📊 Data Point: BARR bottoms ranked #1 of 39 patterns with ~55% average rise, 9% failure, 76% target achievement. — Thomas Bulkowski, ThePatternSite

What Is the Head and Shoulders Pattern (Bearish Reversal)?

The Head and Shoulders Pattern is a chart-formation that occurs when a market up-trend develops a peak (“head”) between two lower peaks (“shoulders”), with a connecting support line (“neckline”), and a break of the neckline signals a reversal.

Visually, the pattern shows three successive peaks: the left shoulder (a rise then decline), the head (a higher rise then decline), and the right shoulder (a rise roughly similar to the left shoulder then decline). A neckline is drawn connecting the two intervening troughs. A decisive breakout below the neckline (for the standard bearish version) typically confirms the reversal. Volume often diminishes through the pattern and increases on the neckline break. 

📊 Data Point: For head-and-shoulders tops, average post-neckline declines ≈ 13%, ranking mid-tier among bearish setups. — Thomas Bulkowski, ThePatternSite

What Is an Inverse Head and Shoulders Pattern (Bullish Reversal)?

Inverse Head and Shoulders Pattern (H&S) is a price-chart formation with three successive troughs where the middle trough is the lowest, followed by a breakout above the neckline signalling a potential reversal from a downtrend to an uptrend.

The pattern begins with a clear preceding downtrend. The first trough (left shoulder) forms, then the price rallies to a resistance line (neckline).
Next the second trough (head) forms at a lower low, followed by a rally back to the neckline.
Then the third trough (right shoulder) forms at a higher low than the head but roughly similar to the left shoulder.

The neckline (which connects the highs between the troughs) is then broken to the upside, preferably on increased volume, which confirms the pattern.  The breakout often has a measured target equal to the vertical distance from head to neckline added above the neckline.

📊 Data Point: Head-and-shoulders bottoms showed average rises ≈ 13% after upward breakouts, with wider patterns performing best. — Thomas Bulkowski, ThePatternSite

What Is a Triple Top Pattern and How Do You Confirm It?

The Triple Top pattern is a bearish reversal formation that appears after an up-trend, in which the price makes three nearly equal highs at a resistance level and then breaks below the support line (neckline) formed by the intervening lows.

Visual Characteristics:

• After a sustained upward move, the price rallies to a resistance level, pulls back, rallies again to roughly the same resistance, pulls back again, and rallies one last time to that resistance level — resulting in three distinct peaks.

• The peaks are roughly the same height; the two intermediate pull-backs (valleys) define a support line (neckline). 

• A breakdown below the neckline (with increased volume typically) confirms the pattern and signals that the prior up-trend may be ending. 

• Volume often decreases on successive rallies (showing fading buying strength) and increases when the price breaks the support.

📊 Data Point: High-score triple tops declined ~27%, low-score ones ~15%, underscoring selectivity. — Thomas Bulkowski, ThePatternSite

What Is a Triple Bottom Pattern and How Do You Trade It?

The Triple Bottom Pattern is a bullish-reversal chart pattern that forms after a down-trend and features three successive lows at approximately the same price level, followed by a breakout above resistance.

Visually, the pattern displays three distinct troughs that touch a common support line, separated by two intermediate peaks (forming something like a "W" with an extra dip). The lows are nearly equal, and after the third low the price breaks above the “neckline” (resistance level drawn across the peaks), signalling a shift from sellers being dominant to buyers gaining control.

📊 Data Point: Failed triple bottoms still dropped ~14% after invalidation, highlighting asymmetric risk. — Thomas Bulkowski, ThePatternSite

What Is a Rounding Bottom Pattern and Why Is It Bullish?

The rounding bottom pattern is a bullish reversal chart pattern in which prices gradually shift from a down-trend into an up-trend, forming a smooth “U”-shaped curve.

How Do You Identify a Rounding Bottom Pattern?

• The pattern begins with a sustained downward move, gradually slows into a flattening phase, and then transitions into a steady upward move, completing a bowl- or saucer-shaped formation. 

• Throughout the formation, trading volume typically declines during the descent and stabilization phases, then increases as the price begins to incline and breaks out upward. 

• A resistance line (neckline) is typically drawn across the highs preceding the bottom; the pattern is confirmed when price breaks above this line. 

• The time-frame for formation tends to be relatively long—weeks to months or even years—reflecting a gradual change in sentiment rather than a sharp reversal.

📊 Data Point: Average rise ~48%, failure ~4%, 65% meet price target across nearly 1,000 examples. — Thomas Bulkowski, ThePatternSite

What Is a Rounding Top Pattern and When Does It Break Down?

A rounding top pattern is a bearish-reversal chart formation whereby a prolonged uptrend gradually flattens, arcs into a dome-shaped (inverted “U”) peak, and then breaks down below its base support level.

The pattern begins with an established uptrend, then price action slows and shifts into a smooth, curved peak rather than a sharp spike.  Trading volume tends to decline during the formation of the arc, signalling waning bullish momentum, and often rises once the price breaks the support (or “neckline”) of the pattern.  The completed structure typically resembles an upside-down bowl or dome; the breakdown below the base signals the likely move into a downtrend.

📊 Data Point: Rounding tops rank among the strongest bearish reversals, producing sizable multimonth declines. — Thomas Bulkowski, ThePatternSite

What Is a Diamond Top Pattern and How Do You Spot It?

The Diamond Top Pattern is a bearish-reversal chart pattern that appears after an up-trend, where price first expands its trading range then contracts into a diamond-shaped consolidation before breaking downward.

This pattern begins with a preceding up-trend. Then price swings widen (higher highs and lower lows) forming a broadening shape, followed by a phase of narrowing price action (lower highs and higher lows) such that trendlines drawn across the extremes create a diamond outline. Volume often increases early, then diminishes during the narrowing phase, and typically a decisive breakout below the lower trendline with increased volume signals the reversal. 
Key features include:

• Occurrence at or near the top of a trend. 

• Two distinct phases: first a broadening top, then a contracting triangle. 

• Clear trendlines: one connecting successive peaks (descending in the second phase), and one connecting successive troughs (ascending in the second phase). 

• Confirmation of the pattern comes when price breaks below the lower boundary (in the case of a top) combined with rising volume.

📊 Data Point: Diamond tops typically produce ~10% average declines, performing better when tall and wide. — Thomas Bulkowski, ThePatternSite

What Is a Diamond Bottom Pattern and How Do You Trade It?

The Diamond Bottom Pattern is a bullish-reversal chart formation that appears after a down-trend, in which price swings first broaden (forming higher highs and lower lows) and then contract (forming lower highs and higher lows) to create a diamond-shaped consolidation before a breakout to the upside.

How to identify:

• The pattern is preceded by a clear downward trend. 

• In its first phase, volatility expands: price swings widen, with peaks getting higher and troughs getting deeper. 

• In its second phase, volatility contracts: price swings narrow, forming lower highs and higher lows, creating the “diamond” look. 

• A breakout above the upper boundary of the diamond, preferably accompanied by increased volume, signals the bullish reversal.

• The typical target is calculated by measuring the maximum width of the diamond and projecting that distance upward from the breakout point. 

📊 Data Point: Diamond bottoms show low-teen-percent average rises, with wider structures achieving better follow-through. — Thomas Bulkowski, ThePatternSite

What Is a Dead Cat Bounce Pattern and How Do You Trade It?

The Dead Cat Bounce is defined as a temporary recovery in the price of a falling asset that is quickly followed by a continuation of the down-trend.

Visually, the pattern begins with a sharp decline in price, often breaking support levels, followed by a brief rebound or rally (which typically fails to reach prior highs), and then a resumption of the fall, usually on weak volume and without convincing fundamental change.

📊 Data Point: Shorting after the initial rebound succeeded in ~77% of 43 tested trades. — Thomas Bulkowski, ThePatternSite

What Is a Parabolic Curve Pattern and When Does It Crash?

The Parabolic Curve Pattern is a chart-formation that is a steeply accelerating upward price trajectory (forming a curved “parabola” shape) which often ends in a sharp reversal.

Visually, the pattern begins with a gradual and steady uptrend, then transitions into a rapidly rising phase where higher lows and higher highs occur at an increasing rate, forming a curved support line beneath the price, and finally the price breaks down below that curved trend-line and reverses sharply. 

How to identify:

• The early phase shows moderate upward momentum and small pull-backs, giving a gentle slope. 

• As the trend evolves, the slope steepens and the support trend-line beneath the pullbacks curves upward — the lows form a rising arc. 

• Trading volume typically increases during the steep rise, signalling speculative excess. 

• The reversal point is often abrupt: a strong bearish candle breaks the curved support line, after which the price drops rapidly. 

• The pattern frequently appears near the end of a major advance, and thus has high risk of entering late. 

📊 Data Point: Parabolic rallies commonly retrace 62–79% back to the 50–61.8 % Fibonacci zone within days. — Topstep Research Desk (2024)

What Is an Inverted Cup and Handle Pattern (Bearish)?

The inverted cup and handle pattern is a bearish chart-pattern where a rounded “inverted cup” (an upside-down U-shaped price rise then decline) is followed by a smaller upward “handle” consolidation, after which a breakdown below the handle’s support signals a potential further price decline.

How Do You Identify an Inverted Cup and Handle?

• The “cup” forms as a gradual rally that peaks, flattens and then turns into a rounded decline—shaping an upside-down “U”. 

• The “handle” is a smaller upward retracement or consolidation located near the cup’s lower end (i.e., after the decline) and typically does not reach the cup’s high. 

• A “neckline” or support level lies at the base of the cup/handle region; the pattern is confirmed when the price breaks below that support with increased volume. 

• Volume usually decreases during the formation of the cup and handle, then rises at the breakdown.

📊 Data Point: Inverted cups post average declines ≈ 17–19% depending on decade and market phase. — Thomas Bulkowski, ThePatternSite

What Is a Megaphone Pattern and What Does It Signal?

The Megaphone Pattern is a chart pattern defined by expanding price swings where highs become successively higher and lows become successively lower, bounded by two diverging trend-lines.

How to identify:

• The pattern features a series of at least two higher highs and two lower lows, producing a widening shape on the chart. 

• One trend-line connects the lower lows (sloping downward) and the other connects the higher highs (sloping upward), forming diverging boundaries. 

• Volume often spikes and fluctuates erratically during its formation, reflecting heightened volatility and market indecision. 

• Because volatility is increasing rather than trending in a clear direction, the pattern signals uncertainty; a breakout (above the upper line or below the lower line) is required to determine the next likely move. 

📊 Data Point: Broadening (megaphone) tops underperform on average but still yield ~20% declines on confirmed breaks. — Thomas Bulkowski, ThePatternSite

What Is an Island Reversal Pattern and How Reliable Is It?

The Island Reversal Pattern is a chart formation in which a cluster of trading bars becomes isolated by two price gaps (one at the beginning and one at the end), signalling that the prevailing trend may be reversing.

Visual characteristics:

• The pattern begins with a pronounced gap away from the previous price trend (either gap-up in an uptrend or gap-down in a downtrend).

• Next comes a brief consolidation or trading range (the “island”) composed of one or more bars/candles that are separated from the prior trend by the initial gap and will likewise be separated from the subsequent move by the second gap. Finally the pattern is completed by another gap moving in the opposite direction of the prior trend (for example a gap-down after an uptrend, forming a bearish island reversal). 

• Volume often spikes during the gap periods and/or during the island itself, indicating a sharp shift in sentiment. 

• Because of the isolation created by the gaps, the island appears visually “floating” and disconnected from the surrounding price action.

📊 Data Point: Typical move size ≈ 5–6%, explaining their relatively weak predictive power. — Thomas Bulkowski, ThePatternSite

What Is a Descending Scallop Pattern and How Do You Spot It?

The Descending Scallop pattern is a chart-formation that is a rounded, backward-J shaped price structure often occurring in up-trends and signalling a bearish reversal.

Visually the pattern shows an initial up-trend or upward leg followed by a gentle curved top (the scallop) where two peaks form with a smooth valley between them (the left peak higher than the right) and then a break downward beneath the lower valley/stem signalling the reversal. 

• The formation typically begins with an up-trend, then the price arcs upward and forms a rounded top, giving the “J” shape of the scallop. 

• The left peak of the pattern is higher than the right peak, and the valley between them is smoothly curved rather than sharp. 

• Breakout confirmation comes when price closes below the lowest valley of the scallop (rather than simply breaking a horizontal resistance). In many cases the pattern breaks downward. 

• Volume often declines during the rounding portion (indicating waning buying interest) and picks up on the break below the valley (indicating accelerated selling interest).

📊 Data Point: High-score descending scallops gained ~34% (up) or lost ~21% (down) versus ~10% for weak setups. — Thomas Bulkowski, ThePatternSite

What Is an Ascending Scallop Pattern and How Do You Trade It?

The Ascending Scallop Pattern is a chart-formation that is a gently curved upward “J”-shaped continuation pattern in an uptrend where the price pulls back slightly in a rounded fashion and then breaks higher.

Visually, the pattern begins with a prevailing up-trend, followed by a rounded pull-back where the curve slopes gently downward and then turns up (forming the lower part of the “J”), then the price resumes its upward climb and finally breaks above the prior peak to continue the trend.

How Do You Identify an Ascending Scallop Pattern?

• The pattern occurs in an up-trend and starts with a moderate upward move, then the price gradually pulls back in a smooth curved shape, not a sharp spike or steep drop. 

• The valley of the curvature is fairly shallow, and the right side of the pattern rises toward a new higher high (the “lip” of the J) which lies above the left side’s peak. 

• A breakout is confirmed when price closes above the highest high of the scallop formation (the right-side peak). Strong volume during the breakout adds conviction. 

• The width (time) of the pull-back portion tends to be shorter than the initial advance, and volume often decreases during the rounded pull-back phase.

📊 Data Point: Ascending scallops averaged ~38–54% rises across multiple decades of data. — Thomas Bulkowski, ThePatternSite

What Is a Butterfly Harmonic Pattern and How Does It Work?

The Butterfly Chart Pattern is a harmonic reversal chart-formation that comprises four legs (X→A, A→B, B→C, C→D) constructed according to specific Fibonacci retracement and extension ratios, signalling a potential trend reversal at point D.

How Do You Identify a Butterfly Pattern (Fibonacci Levels)?

• The pattern begins with leg X→A, a clear impulsive move in one direction.

• Leg A→B is a retracement of X→A, typically around the 78.6% Fibonacci level of XA. 

• Leg B→C then moves back in the direction of XA and retraces about 38.2% to 88.6% of AB. 

• Finally leg C→D extends beyond point X (i.e., the pattern overshoots the original move) and often reaches a Fibonacci extension of AB or XA (commonly 127%–161.8% of XA or 161.8%–261.8% of BC). 

• The shape resembles a stylised “butterfly” with two wings: the XA & AB segments forming one wing, and BC & CD forming the other.

• At point D the market often shows signs of exhaustion and a potential reversal begins.

📊 Data Point: Harmonic butterfly tests on FX pairs achieved ~45% win rate and ~0.29% mean trade return, depending on rule precision. — Quantified Strategies Backtest Team (2025

How Do You Turn Chart-Pattern Knowledge Into Measurable Trading Improvement?

Recognizing patterns like double tops, triangles, flags, and wedges is only the first step; the real edge comes from verifying how well each setup performs in your own execution. Because many formations depend on confirmation (breakouts, neckline breaks, and volume behavior), reviewing trades helps you separate “textbook” signals from the versions you tend to misread or chase. A consistent trading journal also makes risk management concrete by tracking whether your stops, targets, and reward-to-risk assumptions match what actually happened after confirmation.

Over time, logging context—market regime, pattern quality, entry trigger, and post-trade notes—lets you compare your outcomes to the win-rate and average-move expectations discussed above, and refine rules around selectivity and sizing. Using a structured tracker with analytics, such as Rizetrade trading journal software for performance metrics and PnL analysis, can make it easier to monitor statistics, spot recurring mistakes, and build decision-making habits grounded in evidence rather than memory.