Chart Patterns

Direct Answer

A chart pattern is a multi-bar formation whose shape describes an identifiable process: accumulation, distribution, or consolidation before continuation. Each one is defined by its structure, the volume behaviour that corroborates it, the move it implies once complete, and the price at which it has failed, that last part being the one most often left out. Patterns are less reliable than pattern catalogues imply and depend heavily on context and confirmation.

How reliable are chart patterns?

Less reliable than pattern catalogues imply, and highly dependent on context and confirmation. A pattern identified in advance and traded on a defined break with a defined invalidation is a risk-managed setup; the same pattern identified after the fact on a chart you already know the outcome of is not evidence of anything.

Every guide in this section

5 guides in this section.

All guides

• Broadening Formation Chart Pattern

  A broadening formation is a chart pattern with diverging trendlines showing widening price swings and rising volatility.

• Pattern Subjectivity & Rule Definition

  Pattern subjectivity is the disagreement between traders reading the same chart differently; rule definition fixes it with explicit, testable criteria.

• Rounded Bottom Pattern Explained

  A rounded bottom is a gradual, saucer-shaped reversal pattern where price stops falling, flattens, and curves back up.

• Wyckoff Accumulation Schematic Explained

  A phase-by-phase guide to the Wyckoff accumulation schematic: Selling Climax, Automatic Rally, Spring, Sign of Strength, and Last Point of Support.

• Wyckoff Distribution Schematic Explained

  The Wyckoff distribution schematic maps how large operators sell into demand across Phases A-E, from the Buying Climax and Upthrust to the Sign of Weakness.