Trading Patterns

Trading Patterns Cheat Sheet
This cheat sheet summarizes common trading patterns, their types, and reliability, based on information from TradingView, XS.com, and Strike.money.

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Reversal Patterns
Reversal patterns signal a potential change in the direction of an existing trend.

Head and Shoulders
- Type: Reversal (Bearish)
- Reliability: Very High (10/10 from xs.com, ~83% success rate from TradingView/strike.money)
- Description: Forms at the peak of an uptrend with a central highest peak (head) and two lower, roughly equal peaks (shoulders). Signals a trend reversal from bullish to bearish.

Inverse Head and Shoulders
- Type: Reversal (Bullish)
- Reliability: Very High (10/10 from xs.com, ~83% success rate from TradingView/strike.money)
- Description: The opposite of the Head and Shoulders pattern, forming after a downtrend. It has three troughs, with the middle trough being the lowest. Signals a trend reversal from bearish to bullish.

Double Top
- Type: Reversal (Bearish)
- Reliability: High (9/10 from xs.com, ~75% success rate from TradingView/strike.money)
- Description: Two consecutive peaks at roughly the same level, resembling the letter "M". Indicates a potential trend change from bullish to bearish.
- Variations: ThePatternSite.com identifies several variations based on the shape of the peaks: Adam & Adam (sharp peaks), Adam & Eve (sharp then rounded), Eve & Adam (rounded then sharp), and Eve & Eve (rounded peaks).

Double Bottom
- Type: Reversal (Bullish)
- Reliability: High (9/10 from xs.com, ~78% success rate from TradingView/strike.money)
- Description: Two consecutive troughs at roughly the same level, resembling the letter "W". Signals a potential trend change from bearish to bullish.
- Variations: ThePatternSite.com identifies several variations: Adam & Adam, Adam & Eve, Eve & Adam, and Eve & Eve.

Triple Top
- Type: Reversal (Bearish)
- Reliability: High (9/10 from xs.com, ~77% success rate from TradingView/strike.money)
- Description: Three consecutive peaks at roughly the same resistance level. A strong bearish reversal pattern.

Triple Bottom
- Type: Reversal (Bullish)
- Reliability: High (9/10 from xs.com, ~79% success rate from TradingView/strike.money)
- Description: Three consecutive troughs at roughly the same support level. A strong bullish reversal pattern.

Rising Wedge
- Type: Reversal (Bearish)
- Reliability: High (8/10 from xs.com)
- Description: The price rallies between upward-sloping support and resistance lines that are converging. Reflects growing disillusionment among buyers.

Falling Wedge
- Type: Reversal (Bullish)
- Reliability: High (8/10 from xs.com, ~70% success rate)
- Description: Marked by lower highs and lower lows converging towards a single point. Indicates indecision, as buyers begin absorbing selling pressure.

Rounding Top
- Type: Reversal (Bearish)
- Reliability: Medium (7/10 from xs.com)
- Description: A gradual, rounded turn from an uptrend to a downtrend, resembling a dome shape.

Rounding Bottom
- Type: Reversal (Bullish)
- Reliability: Medium (7/10 from xs.com)
- Description: A gradual, rounded turn from a downtrend to an uptrend, resembling a "U" shape.

Diamond Top
- Type: Reversal (Bearish)
- Reliability: High (8/10 from xs.com, ~69% success rate)
- Description: Forms when price creates higher highs and lower lows in a diamond shape. Signals a transition from an uptrend to a downtrend.

Diamond Bottom
- Type: Reversal (Bullish)
- Reliability: High (8/10 from xs.com)
- Description: Forms after a downtrend with price creating lower lows and higher highs in a diamond shape. Signals a reversal to an uptrend.

Pipe Top
- Type: Reversal (Bearish)
- Reliability: Medium (6/10 from xs.com)
- Description: Characterized by two long, parallel candlesticks or bars extending upwards, indicating a sharp rejection of higher prices.

Pipe Bottom
- Type: Reversal (Bullish)
- Reliability: Medium (6/10 from xs.com)
- Description: Two long, parallel candlesticks or bars extending downwards, indicating a strong rejection of lower prices.

Island Reversal
- Type: Reversal
- Reliability: High (8/10 from xs.com, ~73% success rate)
- Description: A formation of candlesticks isolated from the previous and subsequent price action by gaps. A gap down, a period of consolidation, and then a gap up can signal a bullish reversal (and vice-versa for bearish).

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Continuation Patterns
Continuation patterns suggest that the current trend is likely to persist after a brief pause or consolidation.

Ascending Triangle
- Type: Continuation (Bullish)
- Reliability: High (8/10 from xs.com, ~73-75% success rate)
- Description: Forms during an uptrend with a horizontal resistance line and a rising support line. Suggests a breakout to the upside is likely.

Descending Triangle
- Type: Continuation (Bearish)
- Reliability: High (8/10 from xs.com, ~68-73% success rate)
- Description: Forms during a downtrend with a horizontal support line and a falling resistance line. Suggests a breakdown to the downside is likely.

Bullish Flag
- Type: Continuation (Bullish)
- Reliability: High (9/10 from xs.com, ~67-75% success rate)
- Description: A strong uptrend (the flagpole) followed by a brief consolidation in a downward-sloping channel (the flag).
- Variations: A `High and Tight Flag` is a particularly bullish and rare variation.

Bearish Flag
- Type: Continuation (Bearish)
- Reliability: High (9/10 from xs.com, ~67% success rate)
- Description: A strong downtrend (the flagpole) followed by a brief consolidation in an upward-sloping channel (the flag).

Bullish Pennant
- Type: Continuation (Bullish)
- Reliability: High (9/10 from xs.com, ~55-68% success rate)
- Description: A strong uptrend (the flagpole) followed by a consolidation in a small symmetrical triangle (the pennant).

Bearish Pennant
- Type: Continuation (Bearish)
- Reliability: High (~55-71% success rate)
- Description: A strong downtrend (the flagpole) followed by consolidation in a small symmetrical triangle (the pennant).

Bullish Rectangle
- Type: Continuation (Bullish)
- Reliability: High (8/10 from xs.com, ~68-78% success rate)
- Description: Sideways price movement between two parallel support and resistance levels during an uptrend.

Bearish Rectangle
- Type: Continuation (Bearish)
- Reliability: High (8/10 from xs.com, ~65-79% success rate)
- Description: Sideways price movement between two parallel support and resistance levels during a downtrend.

Cup and Handle
- Type: Continuation (Bullish)
- Reliability: High (9/10 from xs.com, ~76% success rate)
- Description: A "U" shaped cup followed by a smaller, downward-drifting handle. It's a bullish continuation pattern.
- Variations: An `Inverted Cup and Handle` is the bearish version of this pattern.

Dead Cat Bounce
- Type: Continuation (Bearish)
- Reliability: Medium (7/10 from xs.com)
- Description: A temporary, short-lived recovery in price after a significant fall, which is then followed by a continuation of the downtrend.

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Bilateral Patterns
Bilateral patterns represent periods of market indecision where prices could break out in either direction.

Symmetrical Triangle
- Type: Bilateral
- Reliability: Medium (7/10 from xs.com, ~70% success rate)
- Description: Characterized by two converging trendlines, one ascending and one descending. The price can break out in either direction, so traders wait for confirmation.

Megaphone / Broadening Wedge
- Type: Bilateral/Reversal
- Reliability: Medium (7/10 from xs.com)
- Description: Formed by two diverging trendlines, with higher highs and lower lows. It indicates increased volatility and market uncertainty. Can be a reversal or continuation pattern depending on the breakout.

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Other Patterns

Harmonic Patterns
- Type: Reversal
- Reliability: High (9/10 from xs.com)
- Description: Complex patterns based on Fibonacci ratios to predict reversals. Examples include Gartley, Bat, Butterfly, and Crab patterns.

Elliott Wave Pattern
- Type: Cyclical/Continuation
- Reliability: Very High (10/10 from xs.com)
- Description: A theory that markets move in predictable, repetitive waves. The basic pattern is five waves in the direction of the main trend followed by three corrective waves.

Wolfe Wave
- Type: Reversal
- Reliability: High (9/10 from xs.com)
- Description: A five-wave pattern that predicts a price target based on the projection of the line created by waves 1 and 4. Can be bullish or bearish.

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Additional Patterns from ThePatternSite.com
The following is a list of additional patterns identified on ThePatternSite.com. Detailed descriptions and statistics are not yet included in this cheat sheet.

- 3L-R (and inverted)
- Big M / Big W
- Broadening formations, right-angled and ascending/descending
- Bump-and-run reversal bottoms/tops
- Cat's Ears
- Closing price reversal, downtrend/uptrend
- Cloud bank
- Dead cat bounce, inverted
- Flag, high and tight
- Flat base
- Gap2H (and inverted)
- Hook reversal, downtrend/uptrend
- Horn bottoms/tops
- Inside day
- Island, long
- Key reversal, downtrend/uptrend
- Measured move down/up
- Nr4 / Nr7
- One-day reversal, bottom/top
- Open-Close reversal, downtrend/uptrend
- Outside day
- Roof (and inverted)
- Scallops, ascending/descending (and inverted)
- Shark-32
- Simple ABC Correction
- Spikes or Tails
- Three falling peaks
- Three peaks and domed house
- Three rising valleys
- V bottoms/tops (and extended)
- Weekly reversal, downside/upside
- Wide ranging day, downside/upside reversal


Links:
https://www.xs.com/en/blog/stock-chart-patterns/
https://www.tradingview.com/chart/BTCUSD/SGUilTg3-TOP-20-TRADING-PATTERNS-cheat-sheet/
https://www.strike.money/technical-analysis/chart-patterns