Continuation Patterns Typical for Downtrend

Rising Wedge
A rising wedge pattern forms between the converging ascending resistance and support levels,
with support being steeper. There is no defined number of trend line touches needed for the validation
of the pattern.

A rising wedge pattern that occurs during a downward trend can look like a short-term uptrend. In
reality, it points to that the existing trend will go on and therefore, is a continuation chart pattern. A
more complete technical analysis that includes other indicators should help you determine the type of
this pattern.

Bearish Rectangle

At its core, the rectangle is a neutral chart pattern. However, when it resolves in favor of sellers and the
price goes down, it is considered bearish.

When the price bounces between the same resistance and support levels, appearing as parallel lines, for
a while, you are looking at a rectangle. Applying additional technical analysis should help you understand
which side will have the advantage as the pattern resolves.

Descending Triangle

A descending triangle pattern is shaped by a declining resistance level and a consistent support level. For
this pattern to be considered valid, the price movements have to touch each side of the triangle at least
twice.

Triangles are bilateral chart patterns, which means they can resolve in both a trend reversal and
continuation. A descending triangle that sees a breakout below the support line reinforces a bearish
trend.

Bearish Pennant

A pennant pattern appears similar to a wedge or a triangle shape: it is formed by two converging trend
lines. The distinctive feature of a bearish pennant is a “pole”, formed by a large downward price move
before the short-term consolidation.

Bearish pennants occur during a downtrend and even though briefly interrupt the existing trend, signal
that it will continue.

Bearish Flag

A bearish flag pattern has the features of both pennants and channels. Like channels, which are bilateral
patterns, they form between two parallel trend lines. However, flags are brief and resolved in a more
predictable manner, continuing the previous trend.

Like pennants, flags also have poles — strong price movements that precede the pattern’s formation.
The pole length is useful to determine the strength of the breakout. In this case, the breakout direction
would be to the downside.
Reversal Patterns Typical for Downtrend

These patterns serve as technical indicators to signal a change in the price trend. Due to occurring during
a downtrend, this makes them bullish chart patterns. When such patterns are confirmed in time or with
other technical indicators, traders usually follow up by opening a long position.
Double/Triple Bottom

This pattern commonly emerges when it takes multiple tries (two or three respectively) for a trend
direction to reverse. Its shape resembles the letter(s) “W” or “WV”, with intermittent resistance forming
a neckline.

By the time this chart pattern emerges, it is clear that the trend is changing. Traders pay more attention
to the height of the neckline to eyeball the next sharp price move.

Inverse Head and Shoulders

The inverse head and shoulders pattern resembles a triple bottom pattern, with a distinguishing
difference that the first rejection from the neckline pushes the price below the support, which then gets
retested. It is a classic bullish reversal pattern.

Falling Wedge

A falling wedge pattern is shaped by the declining resistance and support levels, with resistance being
steeper. There is no defined number of trend line touches needed for the validation of the pattern.

A falling wedge pattern that occurs at the point of a downward trend exhaustion can be considered a
reversal chart pattern. To understand whether the trend is about to finish, look at other technical
indicators.

Ascending Triangle

An ascending triangle pattern is shaped by a rising support level and a consistent resistance level. For
this pattern to be considered valid, the price movements have to touch each side of the triangle at least
twice.

Triangles are bilateral chart patterns, which means they can resolve in both a trend reversal and
continuation. An ascending triangle that sees a breakout above the resistance line introduces a bullish
reversal.

Cup and Handle

Another classic chart pattern — cup and handle — is thought to be rather effective, although pinpointing
it correctly can be challenging. It is observed over prolonged time frames and consists of a long U-shape
move, followed by a short-term rejection at the neckline.

The cup and handle pattern is a sign that a downtrend is over, and a stronger move to the upside is
about to happen. As such, it is a bullish pattern.
Continuation Patterns Typical for Uptrend

These patterns serve as technical indicators to signal a continuation of the existing uptrend. Due to
occurring during an uptrend, this makes them bullish chart patterns. When such patterns are confirmed
in time or with additional technical indicators, traders usually follow up by holding or opening a long
position.

Falling Wedge

A falling wedge pattern forms between the declining support and resistance levels, with resistance being
steeper. There is no defined number of trend line touches needed for the validation of the pattern.

A falling wedge pattern that occurs during an upward trend can look like a short-term downtrend. In
reality, it points to that it will go on and therefore, is a continuation chart pattern. A more complete
technical analysis that includes other indicators should help you determine the type of this pattern.

Bullish Rectangle

In a vacuum, the rectangle is a neutral chart pattern. However, when it resolves in favor of buyers and
the price goes up, it is considered bullish.
When the price bounces between the same resistance and support levels, appearing as parallel lines, for
a while, you are looking at a rectangle. Applying additional technical analysis should help you understand
which side will have the advantage as the pattern resolves.

Bullish Pennant

A pennant pattern appears similar to a wedge or a triangle shape: it is formed by two converging trend
lines. The distinctive feature of a bullish pennant pattern is a “pole”, formed by a large upward price
move before the short-term consolidation.

Bullish pennants occur during an uptrend and even though briefly interrupt the existing uptrend, signal
that it will continue.

Bullish Flag

A bullish flag pattern has the features of both pennants and channels. Like channels, which are bilateral
patterns, they form between two parallel trend lines. However, flags are brief and resolved in a more
predictable manner, continuing the previous trend.

Like pennants, flags also have poles — strong price movements that precede the pattern’s formation.
The pole length is useful to determine the strength of the breakout. In this case, the breakout direction
would be to the upside.

Ascending Triangle

An ascending triangle pattern is shaped by a rising support level and a consistent resistance level. For
this pattern to be considered valid, the price movements have to touch each side of the triangle at least
twice.

Triangles are bilateral chart patterns, which means they can resolve in both a trend reversal and
continuation. An ascending triangle that sees a breakout above the resistance line reinforces a bullish
trend.
Reversal Patterns Typical for Uptrend

These patterns serve as technical indicators to signal a change in the price trend. Due to occurring during
an uptrend, this makes them bearish chart patterns. When such patterns are confirmed in time or with
additional technical indicators, traders usually follow up by opening a short position.
Double/Triple Top

This pattern commonly emerges when it takes multiple tries (two or three respectively) for a trend
direction to reverse. Its shape resembles the letter “W” or a crown with three tops, with intermittent
resistance forming a neckline.

By the time this chart pattern emerges, it is clear that the trend is changing. Traders pay more attention
to the height of the neckline to eyeball the next sharp price move.

Head and Shoulders

The head and shoulders pattern resembles a triple top pattern, with a distinguishing difference that the
first recovery from the neckline pushes the price up above the resistance, which then gets retested. It is
a classic bearish reversal pattern.

Rising Wedge

A rising wedge pattern forms between the ascending support and resistance levels, with support being
steeper. There is no defined number of trend line touches needed for the validation of the pattern.

A rising wedge pattern that occurs at the point of an upward trend exhaustion can be considered a
reversal chart pattern. To understand whether the trend is about to finish, watch other technical
indicators.

Descending Triangle

A descending triangle pattern is shaped by a rising resistance level and a consistent support level. For
this pattern to be considered valid, the price movements have to touch each side of the triangle at least
twice.

Triangles are bilateral chart patterns, which means they can resolve in both a trend reversal and
continuation. A descending triangle that sees a breakout below the support line introduces a bearish
reversal.

Inverse Cup and Handle

Although the cup and handle pattern is usually considered a bullish reversal pattern, some traders also
observe an inverse variation of this chart pattern. As an opposite to this pattern, it consists of a rounded,
U-shaped top, followed by a short surge above the shape’s neckline.

The inverse cup and handle pattern is a bearish pattern and a sign that an upside trend has been
exhausted. The “handle” part confirms the chart pattern and is believed to be followed by further price
movement to the downside.