3 Types of Patterns

Patterns come in all shapes, but they usually fall into three main categories: Reversal, Continuation, and Candlestick patterns. Each category helps you size up where the market might be headed. Let’s break them down.

Reversal Patterns

These signal a potential trend flip. Price might have been grinding up, then suddenly hits one of these patterns and reverses to the downside (or vice versa).

Examples: Double Top / Double Bottom, Head & Shoulders.

Continuation Patterns

These indicate that the market momentum is likely to keep trucking in the same direction.

Examples: Rectangles, Flags, Wedges.

Candlestick Patterns

These are short-term signals that can be powerful triggers for entries or exits. Candlestick patterns can point to both reversals and continuations, depending on context.

Examples: Doji, Harami, Inside Bars.

We will explore all the examples in detail very soon. Be patient.

Getting comfortable with these categories helps you spot setups faster. Keep your eyes peeled for the right shapes, confirm with other indicators, and trade with confidence.