Module 4 · Chart Patterns — the framework · Lesson 16/144
8 min 50 XP
A chart pattern is just a recognisable picture left behind by the same battle you already know: buyers versus sellers, supply versus demand. Each pattern tells you three things — who is winning, where the fight resolves (the breakout level), and how far price is likely to travel once it does (the measured target). Learn to read the story and the shape names become almost irrelevant.
Patterns split into two families. Continuation patterns (triangles, flags) are pauses inside a trend — the market catches its breath, then carries on the same way. Reversal patterns (double tops/bottoms, head & shoulders) mark the end of a trend, where control changes hands. Knowing which family you are looking at sets your entire bias.
Continuation
Reversal
The professional reason to use patterns is not the entry — it is the measured move. Each pattern has a measurable height, and once price breaks out, that same height projected from the breakout gives a realistic first target. It turns a vague "it looks bullish" into a concrete plan: entry here, stop there, target a known distance away. That is what lets you judge reward-to-risk before you ever click.
Why most pattern trades fail
Three reasons, every time. (1) Drawing bias — forcing a pattern that is not really there because you want a trade. (2) No confirmation — buying the shape before the breakout actually closes, and getting faked out. (3) Wrong location — a textbook pattern in the middle of nowhere, with no level or trend behind it. Fix these three and patterns become genuinely powerful.