What Are Chart Patterns?
Chart patterns are geometric shapes that appear repeatedly in price charts due to the natural behaviour of market participants. They are formed by trendlines, support levels, resistance levels, highs, lows, and consolidation zones.
These patterns work because markets are driven by human psychology, and human behaviour tends to repeat. This repetition creates identifiable shapes that traders can study and trade.
Most chart patterns fall into three categories:
Reversal Patterns – signal that a trend is likely to change direction
Continuation Patterns – show that the existing trend will likely continue
Bilateral Patterns – indicate the market can break out in either direction
Understanding these categories helps traders interpret market situations with more confidence.
Chart patterns are geometric shapes that appear repeatedly in price charts due to the natural behaviour of market participants. They are formed by trendlines, support levels, resistance levels, highs, lows, and consolidation zones.
These patterns work because markets are driven by human psychology, and human behaviour tends to repeat. This repetition creates identifiable shapes that traders can study and trade.
Most chart patterns fall into three categories:
Reversal Patterns – signal that a trend is likely to change direction
Continuation Patterns – show that the existing trend will likely continue
Bilateral Patterns – indicate the market can break out in either direction
Understanding these categories helps traders interpret market situations with more confidence.
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