Crypto charts are like maps of uncharted terrain. Some see chaos. Others read signals. Chart patterns help reveal where the market is leaning. They aren’t surgical tools, but in skilled hands, they’re incredibly useful.
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Types of Chart Patterns
Patterns generally fall into two categories:
- Reversal patterns — when a trend loses steam and flips direction
- Continuation patterns — when the market pauses before continuing the same direction
Some are neutral. At first glance, they go nowhere. Then suddenly — boom — a breakout. Don’t guess, watch. The breakout will tell the story.
Reversal Patterns
Head and Shoulders
Three peaks: the middle is the highest, the outer ones are lower. It looks like a human silhouette. If the price breaks below the neckline after the right shoulder — a downtrend likely follows.
Inverse Head and Shoulders
The same logic in reverse. Found at market bottoms. When price breaks above the neckline — often signals the start of a rally.
Double Top
Price hits the same high twice, with a dip between. After the second failure to break through, the market often drops. Think of it like the letter M.
Double Bottom
Mirror image of the double top. Two lows, followed by a breakout upward. Like the letter W — often signals recovery.
Triple Top / Bottom
Less common but strong. Three failed attempts to break a level = likely reversal. Watch for a clean breakout.
Diamond
Price swings widen first, then contract — forming a diamond shape. Usually seen near tops. Breakouts can be sharp.
Rounded Bottom
A slow, calm reversal. Price curves like a bowl. No panic, just quiet accumulation. Once resistance is broken — new trend may begin.
Continuation Patterns
Ascending Triangle
Flat resistance above, rising lows below. Buyers push harder each time. Eventually, resistance gives way — breakout up.
Descending Triangle
Support holds, but highs keep dropping. Sellers dominate. Once support breaks — price often drops fast.
Symmetrical Triangle
Both highs and lows contract. Price coils like a spring. Breakouts usually follow the direction of the prior trend.
Flag
Sharp move, then a brief pullback in a parallel channel. When price exits the channel — movement resumes in the same direction.
Pennant
Similar to a flag but forms a small triangle. Appears after fast moves. Breaks out the same way it came in.
Rectangle
Sideways chop between two levels. When price finally breaks out — trend resumes in breakout direction.
Cup and Handle
U-shaped recovery, followed by a small dip (the handle). Then a breakout above resistance. A classic bullish signal.
Rising Wedge
Price climbs, but the range narrows. Momentum fades. Usually leads to a breakdown.
Falling Wedge
Price falls, but sellers tire out. The range tightens. A breakout upward often follows.
Quick Reference Chart
| Pattern | Type | Signal |
|---|---|---|
| Head and Shoulders | Reversal | Breakout down |
| Inverse Head and Shoulders | Reversal | Breakout up |
| Double Top | Reversal | Breakout down |
| Double Bottom | Reversal | Breakout up |
| Triple Top / Bottom | Reversal | Breakout past edge |
| Diamond | Reversal | Breakout either way |
| Rounded Bottom | Reversal | Breakout up |
| Ascending Triangle | Continuation | Breakout up |
| Descending Triangle | Continuation | Breakout down |
| Symmetrical Triangle | Neutral | Trend direction |
| Flag | Continuation | Trend direction |
| Pennant | Continuation | Trend direction |
| Rectangle | Continuation | Breakout from range |
| Cup and Handle | Continuation | Breakout up |
| Rising Wedge | Reversal | Breakout down |
| Falling Wedge | Reversal | Breakout up |
Tips for Using Chart Patterns
Don’t force patterns onto a chart — if it’s hard to see, it’s probably not there.
Patterns are most useful when:
- they’re visually clear
- breakout is confirmed by volume or candle close
- they align with the broader trend
If you enter a trade, place a stop-loss — just beyond the pattern’s edge. It helps you sleep. For profits, set a target or scale out gradually.
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Final Thoughts
Patterns aren’t magic. They don’t promise certainty — but they help bring structure to chaos. Combine them with good judgment and risk management, and they become a powerful tool.
Study old charts. Look at BTC, ETH, SOL. See how the patterns played out. Train your eye. Don’t fear mistakes — they’re part of learning.
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