The Trader’s Blueprint: Reading Charts, Market Structure, and Analysis
📍 Why Reversal & Continuation Patterns Matter
These patterns show when and where price is likely to change direction or keep trending.
Reversal patterns tell you when to exit a bad trade or jump into a new trend early.
Continuation patterns confirm that the trend is still strong, so you don’t close trades too soon.
🔥 Reversal Patterns – Catching Trend Changes Early
🟥 Bullish Reversal Patterns (Price About to Go Up)
1️⃣ Double Bottom – Looks like a "W" on the chart. Price hits a level twice and bounces back up.
2️⃣ Inverse Head & Shoulders – Three lows, with the middle one (the head) being the lowest. Breaks the "neckline" and starts an uptrend.
3️⃣ Morning Star – Three candles: A big red candle, a small indecisive candle, then a big green candle. Signals buyers are taking over.
4️⃣ Hammer – A single candle with a small body and a long lower wick. Found at the bottom of a downtrend, showing buyers are stepping in.
🟩 Bearish Reversal Patterns (Price About to Drop)
1️⃣ Double Top – Looks like an "M" on the chart. Price fails to break a level twice and drops.
2️⃣ Head & Shoulders – Three peaks, with the middle one (the head) being the highest. Once price breaks the neckline, it usually drops hard.
3️⃣ Evening Star – The opposite of a morning star. A big green candle, a small indecisive candle, then a big red candle. Signals sellers are taking over.
4️⃣ Shooting Star – A single candle with a small body and a long upper wick. Found at the top of an uptrend, showing sellers are stepping in.
🚨 Reversal Rule of Thumb:
Look for these patterns at key support/resistance levels.
Wait for confirmation before entering a trade.
Combine with other indicators (e.g., volume, RSI) to strengthen your confidence.
⚡ Continuation Patterns – Riding the Trend for Bigger Profits
🔹 Bullish Continuation Patterns (Trend Keeps Going Up)
1️⃣ Bullish Flag – Price moves up, then consolidates sideways or slightly downward before another breakout.
2️⃣ Ascending Triangle – Price makes higher lows while resistance stays the same, then breaks out upwards.
3️⃣ Falling Wedge – Price squeezes downwards, but the highs and lows get tighter, leading to an upside breakout.
🔸 Bearish Continuation Patterns (Trend Keeps Going Down)
1️⃣ Bearish Flag – Price moves down, then consolidates sideways or slightly upward before another drop.
2️⃣ Descending Triangle – Price makes lower highs while support stays the same, then breaks downward.
3️⃣ Rising Wedge – Price squeezes upwards, but the highs and lows get tighter, leading to a downside breakout.
🚨 Continuation Rule of Thumb:
These patterns work best when the trend is already strong.
Watch for volume spikes on the breakout—it confirms the move.
If price hesitates too much, it could turn into a fakeout.
🔑 Key Takeaway:
Reversal patterns help you catch market turns early, while continuation patterns help you stay in a strong trend without getting shaken out. Learn these, and you’ll stop getting faked out like 90% of traders.