A chart pattern is a recognizable formation created by price movements on a financial chart, used by technical analysts to predict future price direction. Common patterns include head and shoulders, double tops/bottoms, triangles, and flags, each suggesting either continuation or reversal of the current trend. Identifying chart patterns is a foundational skill in technical analysis, as they often provide reliable entry and exit signals with defined risk levels.
Example
“A textbook head and shoulders chart pattern formed on the daily timeframe, giving traders a clear short entry with a measured move target.”