Chart Patterns

Academic research shows best chart patterns in technical analysis are the inverse head and shoulders, double bottom, triple bottom, descending triangle, and rectangle top. Each of these patterns has a proven success rate of over 85%, with an average gain of 43%.

Bearish patterns in technical analysis suggest a decline in an asset's value. Common examples include flags, wedges, rectangles, and triangles. Due to the stock market's inherent bull bias, short-selling using bear patterns is risky and best left to experienced traders.

Bullish chart patterns signal future price increases and are important to traders, but not all are accurate or profitable. Testing shows triangles, rectangles, double bottoms, and the cup and handle are the most reliable bullish patterns. Traders need to avoid bull pennants and bull flags.

The inverse cup and handle chart pattern is a technical analysis trading strategy. Traders use it to identify a breakdown in asset prices, aiming to profit from short-selling a sharp price decline. The inverse cup and handle chart pattern is considered reliable based on 556+ trades, with an 82% success rate in bull markets.

Twenty years of trading research show the cup and handle pattern has a 95% success rate in bull markets and returns an average profit of +54%. The cup and handle chart pattern is reliable and accurate but can be difficult to identify.

Research shows the most reliable and profitable chart patterns are the Head & Shoulders, with an 89% success rate, the Double Bottom (88%), and the Triple Bottom and Descending Triangle (87%). The most profitable chart pattern is the Rectangle Top, with a 51% average profit.

Traders should avoid trading bear pennants. Decades of testing on over 1,600 trades show bearish pennants have a success rate of only 54% and a low price decrease of 6%. The evidence is clear, pattern trading bear pennants is not worthwhile.

Traders must be cautious when trading bull pennants. Published research reveals a low success rate of 54% and a meager price increase of 7%. This implies pattern trading bullish pennants is as good as coin-flipping with unfavorable odds.

Be careful when trading bearish flags. According to published research, the bear flag pattern has a low success rate of 45%. This means you are flipping a coin when trading this pattern, as the odds are not in your favor. The high-tight bear flag is the only flag pattern you should trade.

A falling wedge is a technical analysis pattern with a predictive accuracy of 74%. The pattern can break out up or down but is primarily considered bullish, rising 68% of the time.

The inverse head and shoulders pattern is one of the most accurate technical analysis reversal patterns, with a reliability of 89%. An inverse head and shoulders pattern occurs when the price hits new lows on three separate occasions, with two lows forming the shoulders and the central trough forming the head.

Decades of trading research show the triple bottom pattern has an 87% success rate in bull markets and an average profit potential of +45%. The triple bottom chart pattern is popular because it is reliable, accurate, and generates a good average profit for traders.

Decades of research reveal the double bottom pattern has an 88% success rate in bull markets and an average profit potential of +50%. The double bottom chart pattern is one of the most reliable and accurate chart indicators for traders.

According to multi-year testing, the rising wedge pattern has a solid 81% success rate in bull markets with an average potential profit of +38%. The ascending wedge is a reliable, accurate pattern, and if used correctly, gives you an edge in trading.

A rectangle is a well-established technical analysis pattern with a predictive accuracy of 85%. The pattern is flexible, can break out up or down, and is a continuation or reversal pattern.

The head and shoulders pattern is one of the most accurate technical analysis reversal patterns, with a reliability of 81%. A head and shoulders top occurs when the price peaks on three separate occasions, with two peaks forming the "shoulders" and the central peak forming the head.

A descending triangle is a powerful technical analysis pattern with a predictive accuracy of 87%. The pattern is flexible and can break out up or down, and is a continuation or a reversal pattern.

According to two decades of trading research, the ascending triangle pattern has an outstanding 83% success rate in bull markets with an average potential profit of +43%. It's a well-known, reliable, and accurate pattern that can generate good profits.

A bull flag is a popular yet widely misunderstood technical analysis pattern characterized by a rapid upward price trend followed by parallel downslope consolidation in price. The price increase resembles a flag pole, while the price consolidation is the flag.

Testing reveals the best stock chart candlestick pattern recognition software is TrendSpider, TradingView, MetaStock, and Finviz. Tickeron's AI can detect traditional stock chart patterns.