Chart Patterns that Often Appear
Chart pattern is a price chart pattern that occurs repeatedly, so the pattern can be used to predict future price movements. Chart patterns are very important in technical analysis, because apart from being able to detect price direction, they can also be observed on all time frames, from daily to monthly. In general, chart patterns are divided into 3 categories:
- Reversal Pattern (Trend reversal pattern)
- Continuation Pattern
- Bilateral Pattern (Reversal pattern or trend continuation)
There are several chart patterns that often appear, namely:
Double Top and Double Bottom
- The double top is a reversal signal formation that is formed after the formation of a strong uptrend pattern.
- The double bottom is a reversal signal formation that is formed after the formation of a strong downtrend pattern.
Bullish and Bearish Pennant
After forming a movement that tends to rise (uptrend) or fall (downtrend) traders, sellers and buyers start to get tired and rest for some time (consolidation) by forming a pattern like a sideways triangle before finally continuing the previous movement.
Bullish and Bearish Flag Pattern
The flag pattern or flag includes a continuous pattern. The price movement occurs in a narrow range, indicating a consolidation pattern before the previous trend continues.
Head and Shoulders and Inverted Head and Shoulders
The head and shoulders pattern is a pattern that seems to form the head and shoulders (left and right). The head and shoulder pattern is often encountered during an uptrend and is an indication that after this pattern is formed there is a possibility that the price will turn into a downtrend.
The inverted head and shoulders pattern is the opposite of the head and shoulders, and usually traders will find this pattern during a downtrend.
Watch the video below for more clear and detailed information!
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