Chart Patterns Explained for Swing Traders

A chart pattern is a recognisable shape that price traces as buyers and sellers push against each other. Traders watch for these shapes because they show where the balance between supply and demand may be shifting, and because they give clear levels for an entry, a stop-loss and a target.

Patterns fall into three groups. Bullish patterns suggest price may move higher, bearish patterns suggest it may move lower, and neutral patterns are sideways pauses. A neutral pattern does not say which way it will break, but it usually resolves in the direction of the trend that came before it, so the prior trend is part of reading it.

Be clear about one thing before you start: patterns fail often. A clean breakout can reverse the next day, and no shape guarantees anything. Each page below therefore puts as much weight on the stop-loss and position size as on the pattern itself.

BullishContinuationBull flag patternA sharp rise, then a short, orderly drift lower before the next leg up. Here is how to confirm a bull flag, where the stop-loss goes and how the target is measured.

BullishContinuationCup and handle patternA rounded base followed by a small, quiet dip near the old high. Here is how to confirm it, where the stop-loss goes and how the target is measured.

BullishReversalDouble bottom patternTwo lows at about the same price, then a break above the peak between them. Here is how to confirm it, where the stop-loss goes and how the target is measured.

BearishReversalDouble top patternTwo peaks at about the same price, then a break below the low between them. Here is how to confirm it, where the stop-loss goes and how the downside target is measured.

BearishReversalHead and shoulders patternThree peaks with the middle one highest, then a break below the line joining the lows. Here is how to confirm it, where the stop-loss goes and how the target is measured.

Updated 2026-10-16

Educational content only. It is not investment advice and not a recommendation to buy or sell any security. Prices in examples and illustrations are made up. Patterns and rules fail often; past behaviour guarantees nothing.