Forex Chart Patterns Cheat Sheet
Every major forex chart pattern — reversal and continuation — in one comprehensive reference. Each pattern entry includes: formation conditions, trend context required, entry trigger, stop placement, and measured move target. Use this cheat sheet during live analysis to quickly confirm pattern validity and define trade parameters.
Key Takeaways
- Chart patterns fall into two categories: reversal (signal end of trend) and continuation (signal pause before trend resumes) — always identify the prior trend context before trading any pattern
- The measured move target is calculated as the height of the pattern projected from the breakout point — this is T1; use T2 at 1.5× the measured move for extended targets
- Every pattern requires a confirmed close beyond the breakout level — intrabar wicks that temporarily breach a neckline without a candle close are not valid breakouts
- Volume confirmation (increasing volume on breakout, decreasing volume during pattern formation) significantly improves the reliability of any chart pattern signal
How to Use This Cheat Sheet
This cheat sheet is organized as a live reference tool — use it during chart analysis to quickly confirm whether a potential pattern is valid and to define the key trade parameters. For each pattern, five elements are defined:
- Type: Reversal or continuation (and direction — bullish/bearish)
- Formation conditions: What structural requirements must be met for the pattern to be valid
- Entry trigger: The specific event that confirms the pattern and justifies entry
- Stop placement: Where the invalidation point is (where to place the stop loss)
- Target: The measured move target and any secondary targets
The patterns are organized into two groups: reversal patterns (which signal a trend change) and continuation patterns (which signal a brief pause before the trend continues). Within each group, patterns are ordered roughly from most common to less common.
No pattern is tradeable in isolation. A Head and Shoulders pattern is only a bearish reversal if it forms after an uptrend. A Bull Flag is only a bullish continuation if it forms after a bullish impulse. Check the higher-timeframe trend direction before trading any chart pattern. A pattern forming against the major trend has significantly lower probability than one that aligns with it.
Reversal Patterns Quick Reference
Head and Shoulders Bearish Reversal
Formation: Three peaks — left shoulder, higher head, right shoulder approximately equal to left shoulder — with a flat or slightly sloping neckline connecting the two troughs between the shoulders. Volume typically higher on left shoulder than right.
Entry trigger: Candle close below the neckline. Conservative: wait for retest of broken neckline as resistance, then sell.
Stop: Above the right shoulder high (+ 1 ATR buffer).
Target: Measure from head peak to neckline. Project that distance downward from neckline breakout = T1. T2 = 1.5× measured move.
Inverse Head and Shoulders Bullish Reversal
Formation: Three troughs — left shoulder, lower head, right shoulder approximately equal to left shoulder — with neckline connecting the two peaks. Volume typically lower on right shoulder formation.
Entry trigger: Candle close above the neckline. Aggressive: enter at neckline break. Conservative: wait for pullback to neckline as support.
Stop: Below the right shoulder low (− 1 ATR buffer).
Target: Measure from neckline to head low. Project upward from neckline breakout = T1.
Double Top Bearish Reversal
Formation: Two peaks at approximately the same price level (within 0.3% tolerance) separated by a trough. The two tops should have distinct separation — not just two adjacent candle wicks. Neckline at the trough between the peaks.
Entry trigger: Candle close below the neckline (neckline break).
Stop: Above the second peak high (+ 1 ATR).
Target: Distance from neckline to peaks. Project downward from neckline break = T1.
Double Bottom (W Pattern) Bullish Reversal
Formation: Two troughs at approximately the same price level with a distinct peak between them. Second bottom may be slightly higher than first (stronger signal). Neckline at the peak between the two troughs.
Entry trigger: Candle close above the neckline.
Stop: Below the second bottom low (− 1 ATR).
Target: Distance from neckline to bottoms. Project upward from neckline break = T1.
Rising Wedge Bearish Reversal / Continuation
Formation: Price makes higher highs and higher lows, but both the upper and lower trendlines slope upward and converge. The range is narrowing as price rises — a contraction of upward momentum. Requires at least 4 touchpoints (2 on each trendline).
Entry trigger: Candle close below the lower rising trendline. Best if accompanied by increasing bearish volume.
Stop: Above the most recent lower wedge high before the breakdown.
Target: Height of the widest part of the wedge projected downward from the breakdown point. Or the start of the wedge (base).
Falling Wedge Bullish Reversal / Continuation
Formation: Price makes lower highs and lower lows, but both trendlines slope downward and converge. Requires at least 4 touchpoints. Volume typically decreases as the wedge forms.
Entry trigger: Candle close above the upper falling trendline. Volume expansion on breakout adds confidence.
Stop: Below the most recent swing low within the wedge.
Target: Height of the widest part of the wedge projected upward from the breakout. Or the start of the wedge.
Triple Top Bearish Reversal
Formation: Three peaks at approximately the same price level with two troughs between them. Rarer than Double Top but more powerful — three failed attempts at a resistance level demonstrate strong selling pressure. Neckline at the lower of the two troughs.
Entry trigger: Candle close below the neckline (more convincing than Double Top because of the third rejection).
Stop: Above the third peak high.
Target: Neckline-to-peak height projected downward from the neckline break.
Triple Bottom Bullish Reversal
Formation: Three troughs at approximately the same price level. Three failed breakdowns below support indicate strong buying interest. Neckline at the higher of the two peaks between the three troughs.
Entry trigger: Candle close above the neckline.
Stop: Below the third trough low.
Target: Neckline-to-trough distance projected upward from the neckline break.
Continuation Patterns Quick Reference
Bull Flag Bullish Continuation
Formation: A sharp, nearly vertical rally (the flagpole) followed by a tight, parallel-channel pullback (the flag). The pullback should retrace no more than 50% of the flagpole. Volume should drop during the flag and expand on breakout. Flag forms at a roughly 30–45° downward angle.
Entry trigger: Candle close above the upper boundary of the flag channel.
Stop: Below the lowest point of the flag (the flag low), + 1 ATR buffer.
Target: Flagpole length projected upward from the breakout point = T1 (the classic measured move). T2 = 1.5× flagpole.
Bear Flag Bearish Continuation
Formation: A sharp decline (the flagpole) followed by a tight, parallel-channel pullback to the upside (the flag). Pullback should not exceed 50% of the flagpole. Flag should be a calm, narrow channel — not a sharp rally.
Entry trigger: Candle close below the lower boundary of the flag channel.
Stop: Above the highest point of the flag (the flag high), + 1 ATR.
Target: Flagpole length projected downward from the breakdown point.
Ascending Triangle Bullish Continuation
Formation: Flat horizontal resistance ceiling (multiple touches at the same level) with rising support trendline. Price is "coiling" against the resistance — buyers are becoming increasingly aggressive while sellers defend a fixed level. Requires 2+ touches on horizontal resistance and 2+ on rising support. Volume decreases into apex.
Entry trigger: Candle close above the horizontal resistance level (the flat top).
Stop: Below the most recent swing low within the triangle (below the rising support line at entry time), + 1 ATR.
Target: Height of the triangle at its widest point (base) projected upward from the breakout.
Descending Triangle Bearish Continuation
Formation: Flat horizontal support floor with descending resistance trendline. Sellers are becoming increasingly aggressive while buyers defend a fixed support level. Requires 2+ touches on horizontal support and 2+ on declining resistance.
Entry trigger: Candle close below the horizontal support level (the flat bottom).
Stop: Above the most recent swing high within the triangle, + 1 ATR.
Target: Triangle height at its widest point projected downward from breakdown.
Symmetrical Triangle Neutral / Continuation
Formation: Both the upper and lower trendlines converge symmetrically (upper declining, lower rising), meeting at an apex. Neither buyers nor sellers dominate — the pattern is neutral until breakout. Breakout direction typically follows the prior trend. Requires 4+ touchpoints (2 on each line).
Entry trigger: Candle close beyond either trendline in the direction of the breakout.
Stop: On the opposite trendline at the time of entry.
Target: Triangle base height projected from the apex or breakout point in the direction of breakout.
Pennant Continuation (Both Directions)
Formation: Similar to a flag but the consolidation forms a small symmetrical triangle (converging trendlines) rather than a parallel channel. The flagpole must be strong and nearly vertical. The pennant consolidation should be brief (a few candles to a few hours on lower TF). Volume drops sharply during consolidation.
Entry trigger: Candle close beyond the converging pennant boundary in the direction of the prior impulse.
Stop: Below the pennant low (bullish) or above the pennant high (bearish).
Target: Flagpole length projected from the breakout point.
Cup and Handle Bullish Continuation
Formation: A rounded bowl-shaped consolidation (the cup — ideally U-shaped, not V-shaped) followed by a small downward drift forming the handle. The cup rim on both sides should be at approximately the same price level. The handle retraces 30–50% of the cup's height. Volume decreases through the cup bottom and during the handle, then expands on breakout.
Entry trigger: Candle close above the handle high (rim resistance) on the right side.
Stop: Below the handle low.
Target: Cup depth (distance from rim to cup bottom) projected upward from the rim breakout = T1. T2 = 2× cup depth.
Quick Reference Table: All Patterns
| Pattern | Type | Signal Direction | Entry Trigger | Stop | Target |
|---|---|---|---|---|---|
| Head & Shoulders | Reversal | Bearish | Close below neckline | Above right shoulder | Head-to-neckline height ↓ |
| Inverse H&S | Reversal | Bullish | Close above neckline | Below right shoulder | Head-to-neckline height ↑ |
| Double Top | Reversal | Bearish | Close below neckline | Above 2nd peak | Neckline-to-peak height ↓ |
| Double Bottom | Reversal | Bullish | Close above neckline | Below 2nd trough | Neckline-to-trough height ↑ |
| Rising Wedge | Reversal | Bearish | Close below lower TL | Above last lower high | Wedge height ↓ from breakdown |
| Falling Wedge | Reversal/Cont. | Bullish | Close above upper TL | Below last swing low | Wedge height ↑ from breakout |
| Triple Top | Reversal | Bearish | Close below neckline | Above 3rd peak | Neckline-to-peak height ↓ |
| Triple Bottom | Reversal | Bullish | Close above neckline | Below 3rd trough | Neckline-to-trough height ↑ |
| Bull Flag | Continuation | Bullish | Close above flag high | Below flag low | Flagpole length ↑ from break |
| Bear Flag | Continuation | Bearish | Close below flag low | Above flag high | Flagpole length ↓ from break |
| Ascending Triangle | Continuation | Bullish | Close above flat top | Below last swing low | Triangle base height ↑ |
| Descending Triangle | Continuation | Bearish | Close below flat bottom | Above last swing high | Triangle base height ↓ |
| Symmetrical Triangle | Neutral | Both | Close beyond either TL | Opposite TL | Triangle base height from apex |
| Pennant | Continuation | Both | Close beyond pennant TL | Opposite pennant edge | Flagpole length from break |
| Cup & Handle | Continuation | Bullish | Close above handle high | Below handle low | Cup depth ↑ from rim break |
Universal Chart Pattern Entry Protocol
Step-by-Step Entry Process for All Chart Patterns
- Identify the prior trend: The trend direction before the pattern formed. Reversal patterns must form against an established trend; continuation patterns must form within one. If there is no clear prior trend, the pattern has no context and should not be traded.
- Confirm formation validity: Check that all structural requirements are met (correct number of touchpoints, required symmetry, no excessive deviations). Patterns that are forced or marginally valid have lower reliability.
- Define the key levels: Neckline, resistance, trendlines — wherever the breakout must occur. Mark this on the chart before the breakout happens so you are prepared.
- Wait for a confirmed candle close: The entry trigger for every chart pattern is a candle close beyond the key level. A wick breach is not sufficient — you need a full candle body close. This rule alone eliminates most false entries.
- Check volume (if available): Volume should expand on the breakout candle for added confirmation. For forex (no central volume), use tick volume or momentum indicators as a proxy. Breakouts on declining volume are more likely to fail.
- Set stop and target before entering: Calculate the stop level and measured move target before placing the order. If the risk/reward is less than 1:1.5, pass the trade — the setup is not worth it. Aim for 1:2 or better.
- Manage the trade: Move stop to breakeven after price reaches T1 (38.2% of measured move). Take 50% off at T1. Let the remainder run to T2. If price reverses to retest the neckline after the breakout, this is a secondary entry opportunity — not a failure if the close holds above (bullish) or below (bearish) the neckline.
Common Chart Pattern Trading Errors
These are the most frequent mistakes traders make when trading chart patterns — knowing them in advance prevents costly errors:
- Entering on a wick, not a candle close. Price frequently pokes through a neckline or trendline on an intrabar wick before closing back inside the pattern. This is a fake breakout. Always wait for the candle to close.
- Not checking the prior trend. A pattern means nothing without trend context. Before calling anything a "reversal pattern," confirm there was a prior trend to reverse. A Double Top after a sideways market is not a Double Top — it is just two similar highs in a range.
- Over-widening pattern tolerances. "It's approximately a Double Top" is not enough. The two peaks must be within a narrow price tolerance (0.3–0.5%). If one peak is 20 pips higher than the other, that is a new high, not a double top. Apply precision when validating patterns.
- Missing the measured move calculation. Always calculate the target before entering. Many traders identify a pattern, enter on the breakout, but have no exit plan. Without a measured move target, you are trading blind.
- Trading continuation patterns against the trend. Bull flags work well in uptrends. The same pattern structure in a downtrend is not a bull flag — it is a bearish retest. Always align continuation patterns with the higher-timeframe trend direction.
- Ignoring volume on breakouts. Chart patterns are most reliable when the breakout is accompanied by above-average volume. A low-volume breakout has a higher probability of being a false break. In forex, use tick volume as a proxy.
Frequently Asked Questions
What are the most reliable forex chart patterns?
The most reliable chart patterns (based on research) are Head and Shoulders, Double Top/Bottom, Ascending/Descending Triangle, Bull/Bear Flag, and Cup and Handle. These patterns have clear, well-defined entry and invalidation rules, which removes ambiguity. Reliability is highest on H4 and Daily timeframes where patterns represent more meaningful price structures. Volume confirmation — high volume on breakout, low volume during formation — significantly improves the success rate of any pattern.
How do you calculate the measured move target?
The measured move is the pattern's height projected from the breakout point. Steps: (1) Measure the vertical distance from the pattern's extremity (head, peak, trough, or base) to the neckline or key level. (2) Apply that same distance from the breakout point in the direction of the trade. Example for H&S: measure from head peak to neckline (e.g., 100 pips). Project 100 pips downward from where price closed below the neckline. That is T1. For conservative traders, T1 can be set at 61.8% of the measured move; for aggressive, at the full projected distance.
What is the difference between reversal and continuation patterns?
Reversal patterns form at the end of a trend and signal a direction change. Examples: Head and Shoulders (bearish reversal after uptrend), Double Bottom (bullish reversal after downtrend), Rising Wedge (bearish reversal). Continuation patterns form within an existing trend as brief pauses before the trend resumes. Examples: Bull Flag (bullish continuation after uptrend impulse), Ascending Triangle (bullish continuation with coiling at resistance). Context is everything — a falling wedge can be a bullish reversal (after downtrend) or a bullish continuation (brief pullback within uptrend).
Where should you place a stop loss on a chart pattern trade?
Always place the stop at the pattern's invalidation point — the level that, if reached, disproves the pattern setup. For Head and Shoulders: above the right shoulder. For Double Top: above the second peak. For triangles: opposite the breakout side. For flags: below the flag low (bullish) or above the flag high (bearish). Add a 1 ATR buffer to avoid stop hunts. Never place stops inside the pattern structure — they will frequently be triggered by normal price noise before the trade has room to develop.
Do chart patterns work on all timeframes?
Chart patterns appear on all timeframes but are most reliable on H4 and Daily charts. Lower timeframes (M5, M15) generate more false patterns due to noise. Higher timeframes (Daily, Weekly) produce fewer but more powerful signals. The H4 is the best starting point for chart pattern trading — enough signals to keep you active, with better reliability than lower timeframes. When a H4 pattern aligns with the Daily trend direction, the combination significantly increases the probability of a successful trade.
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