Pattern No 1.

Head and shoulders

The Head and Shoulders chart pattern is a heavily used charting pattern, giving easily understood
potential buy and sell signals.

Head and Shoulder Components

Left Shoulder: Bulls push prices upwards making new highs; however these new highs are short
lived and prices retreat.

Head: Prices don't retreat for long because bulls make another run, this time succeeding and
surpassing the previous high; a bullish sign. Prices retreat again, only to find support yet again.

Right Shoulder: The bulls push higher again, but this time fail to make a higher high. This is very
bearish, because bears did not allow the bulls to make a new higher or even an equal high. The bears
push prices back to support (Confirmation line); this is a pivotal moment – Will bulls make another
push higher or have the bears succeeded in stopping the move higher.
If prices break the confirmation support line, it is clear that the bears are in charge; thus, when price
closes below the confirmation line, a potential sell signal is given. Note that a downward sloping
confirmation line is generally seen as a more powerful Head & Shoulders pattern, mainly because a
downward sloping confirmation line means that prices are making lower lows.

Pattern No 2 Reverse Head and Shoulders Components

Pattern No 2

Reverse Head and Shoulders Components

Left Shoulder: Bears push prices downwards making new lows; however, bulls begin to return and
push prices slightly higher.

Head: Price gains don't last long before bears return and push prices even lower than before; a
bearish sign. Prices then find buyers at the new lower prices.

Right Shoulder: The bears push downward again, but this time fail to make a lower low. This is
generally seen as bullish sign, bears were unable to push prices further down. Decision time occurs
when the price is pushed higher back to support (Confirmation line); either bears will push prices
back down or bulls will push prices higher, regaining control of the stock, future, or currency pair.
Reverse Head and Shoulders Potential Buy Signal

When price closes above the confirmation line, a potential signal is given. Usually an upward sloping
confirmation line is seen as a more powerful Reverse Head & Shoulders pattern, mainly because an
upward sloping confirmation line means that prices are making higher highs.

Pattern no 3: 

 Cup with handle

The Cup with Handle is a bullish continuation pattern that marks a consolidation period
followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book,
How to Make Money in Stocks.

As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms
after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading
range develops on the right-hand side and the handle is formed. A subsequent breakout from
the handle's trading range signals a continuation of the prior advance.

Components of the Pattern

Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend
should be a few months old and not too mature. The more mature the trend, the less chance
that the pattern marks a continuation or the less upside potential.

Cup: The cup should be “U” shaped and resemble a bowl or rounding bottom. A “V” shaped
bottom would be considered too sharp of a reversal to qualify. The softer “U” shape ensures
that the cup is a consolidation pattern with valid support at the bottom of the “U”. The perfect
pattern would have equal highs on both sides of the cup, but this is not always the case.

Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance.
However, with volatile markets and over-reactions, the retracement could range from 1/3 to
1/2. In extreme situations, the maximum retracement could be 2/3, which conforms with Dow
Theory.

Handle: After the high forms on the right side of the cup, there is a pullback that forms the
handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times
it is just a short pullback. The handle represents the final consolidation/pullback before the
big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller
the retracement, the more bullish the formation and significant the breakout. Sometimes it is
prudent to wait for a break above the resistance line established by the highs of the cup.

Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The
handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.

Volume: There should be a substantial increase in volume on the breakout above the handle's
resistance.

Target: The projected advance after breakout can be estimated by measuring the distance
from the right peak of the cup to the bottom of the cup.

Double Top
Pattern no 4:

Double Top

A double top is a reversal pattern that is formed after there is an extended move up.

The “tops” are peaks which are formed when the price hits a certain level that can’t be
broken. After hitting this level, the price will bounce off it slightly, but then return back to
test the level again.

If the price bounces off of that level again, then you have a DOUBLE top!.This is a strong
sign that a reversal is going to occur because it is telling us that the buying pressure is just
about finished.

With the double top, we would place our entry order below the neckline because we are
anticipating a reversal of the uptrend.Remember that double tops are a trend reversal
formation so you’ll want to look for these after there is a strong uptrend.

You’ll also notice that the drop is approximately the same height as the double top formation.

5 Double Bottom
Pattern no 5: Double Bottom

To create a double bottom pattern, price begins in a downtrend, stops, and then reverses
trend. However, the reversal to the upside is short-term. Price breaks again to the downside
only to stop again and reverse direction upwards. With the second bottom of the double
bottom pattern, it is usually more bullish if the second low is higher than the first low.

A potential buy signal is given when the confirmation line is penetrated to the upside. The
confirmation line is drawn across the top of the double bottom pattern.

Often, after price penetrates the confirmation line, price will retrace for a short time,
sometimes back to the confirmation line. This retracement offers a second chance to get
into the market long.

Pattern No 6 : Three white soldiers

Three White Soldiers is a bullish reversal pattern that is made up of a trio of long green
candles during a downtrend, each appearing after the other, opening within the range of the
previous period and closing near the current period’s high.

Please note that on black & white trading charts, the green candles are replaced by white
candles and hence the name “Three WHITE Soldiers”. Soldiers signify a march ahead or
the upward momentum.
 

Points to remember

The market has to be in a downtrend.

You then have 3 green bullish candlesticks that form consecutively giving you the three white
soldiers chart pattern.

Each candlestick must open within the candle body of the previous candlestick

Each candlestick must close higher than the previous candlestick.

Pattern No 7:Three Black Crows

 Three black crows indicate a bearish candlestick pattern that predicts the reversal of an
uptrend. The black crow pattern consists of three consecutive long-bodied candlesticks that
have opened within the real body of the previous candle and closed lower than the previous
candle. Often, traders use this indicator in conjunction with other technical indicators or
chart patterns as confirmation of a reversal.

In a typical appearance of three black crows, the bulls will start the session with the price
opening modestly higher than the previous close, but the price is pushed lower throughout
the session. In the end, the price will close near the session low under pressure from the
bears. This trading action will result in a very short or nonexistent shadow. Traders often
interpret this downward pressure sustained over three sessions to be the start of a bearish
downtrend.

Pattern No 8: Hammer
Pattern No 8: Hammer
A hammer is a type of bullish reversal candlestick pattern, made up of just one candle, found in price
charts of financial assets. The candle looks like a hammer, as it has a long lower wick and a short
body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid
hammer most traders say the lower wick must be two times greater than the size of the body portion
of the candle, and the body of the candle must be at the upper end of the trading range.

When you see the hammer form in a downtrend this is a sign of a potential reversal in the market as
the long lower wick represents a period of trading where the sellers were initially in control but the
buyers were able to reverse that control and drive prices back up to close near the high for the day,
thus the short body at the top of the candle.

Pattern No 9: Inverted hammer

The pattern is made up of a candle with a small lower body and a long upper wick which is at
least two times as large as the short lower body. The body of the candle should be at the low
end of the trading range and there should be little or no lower wick in the candle.

The long upper wick of the candlestick pattern indicates that the buyers drove prices up at
some point during the period in which the candle was formed, but encountered selling
pressure which drove prices back down to close near to where they opened. When
encountering an inverted hammer, traders often check for a higher open and close on the next
period to validate it as a bullish signal.