What is Chart Pattern?





Chart patterns are graphical representations of price movements on a financial market. They are used by traders to identify potential trading opportunities, and are based on the principle that price movements tend to repeat themselves over time.

There are many different types of chart patterns, each with its own unique characteristics and trading signals. Some of the most common chart patterns include:

Head and Shoulders: A pattern that forms when a security's price rises to a peak before falling, then rises again to a higher peak, and finally falls again. This pattern resembles a person's head and shoulders and is considered a bearish reversal signal.

Double Top: A pattern that forms when a security's price rises to a high level twice before falling. This pattern indicates that the security is likely to experience a price decline.

Triple Bottom: A pattern that forms when a security's price falls to a low level three times before rising. This pattern indicates that the security is likely to experience a price increase.

Rectangle: A pattern that forms when a security's price fluctuates within a defined range over a period of time. This pattern can indicate a potential price breakout in either direction.

Cup and Handle: A pattern that forms when a security's price rises to a high level before falling, then rises again to form a "cup" shape before experiencing a small decline and forming a "handle" shape. This pattern is considered a bullish continuation signal.

It's important to note that chart patterns are not foolproof and should be used in conjunction with other technical analysis tools and fundamental analysis to make trading decisions.