Lingo topic · 33 terms
Chart patterns
Shapes price draws again and again: triangles, flags, heads and shoulders.
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B
- BasingWhen a price that has been falling stops and moves sideways in a tight range, building a 'base' that may come before a rise.
- Bear FlagA pattern where a sharp drop (the pole) is followed by a small, slightly upward drift (the flag), often before another leg down.
- Bear TrapA false breakdown below support that lures sellers in, then snaps back up and leaves them trapped in losing shorts.
- BreakoutWhen price bursts through a resistance level or out of a pattern, often with a surge of momentum.
- Broadening FormationA chart pattern where swings get wider, with higher highs and lower lows, forming a megaphone shape.
- Bull FlagA pattern where a sharp rise (the pole) is followed by a small, slightly downward drift (the flag), often before another leg up.
- Bull TrapA false breakout above resistance that lures buyers in, then reverses and leaves them stuck in losing trades.
C
- Chart PatternA recognisable shape made by price on a chart, which traders use to guess what might happen next.
- Continuation DiamondA diamond-shaped chart pattern that forms mid-trend and then breaks in the same direction the trend was going.
- Continuation PatternA chart pattern that suggests a trend is pausing, not ending, and is likely to resume.
- Cup and HandleA bullish pattern shaped like a teacup: a rounded dip, a recovery, a small pullback (the handle), then a possible breakout.
D
- Dead Cat BounceA brief recovery during a steep decline that fizzles out, after which the fall continues.
- Descending ChannelTwo parallel downward-sloping lines that contain price as it makes lower highs and lower lows.
- Descending TriangleA pattern with a flat floor and falling highs, often read as sellers pressing until the floor gives way.
- DiamondA rare chart pattern that first widens and then narrows, forming a diamond shape, often at the top of a trend.
- Double BottomA W-shaped reversal pattern where price hits the same low twice, fails to break it, and then rises.
- Double TopAn M-shaped reversal pattern where price hits the same high twice, fails to break it, and then falls.
E
F
- FakeoutWhen price breaks through a key level, then quickly reverses back, trapping traders who jumped in on the break.
- Falling WedgeA pattern where price drifts lower between two converging downward lines, often ending with a break upward.
- FlagA short, tidy pause shaped like a small rectangle tilting against a sharp move, usually followed by the move continuing.
- FractalA five-bar pattern marking a local high or low; also the idea that charts look similar at every time frame.
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