Chart Patterns Explained: Tops, Triangles and Flags

Some shapes turn up on forex charts again and again: two peaks at the same height, a range that narrows to a point, a sharp rise followed by a lazy drift. Traders have names for these chart patterns, and the names are useful, but only if you know what each shape is saying and when it has actually said it.

Quick answer: Chart patterns are recognisable shapes that price makes over many candles, such as double tops, head and shoulders, triangles, flags and wedges. Reversal patterns suggest a trend is ending; continuation patterns suggest a pause. A pattern is confirmed only when a candle closes beyond its key line, and its measured-move target is a rough guide, not a forecast.

What are chart patterns?

A chart pattern is a shape that price draws over many candles, often dozens, that traders have learned to recognise. Where a candlestick pattern describes a tussle that lasted one to three candles, a chart pattern tells a longer story: a trend running out of buyers, or a trend pausing for breath before it carries on.

None of these shapes is mysterious. Each one is support, resistance and trend arranged in a way that repeats, because the people behind the prices repeat themselves. Buyers caught at a high hesitate when price returns there; traders who missed a move wait for a dip to join it.

If you are not yet comfortable finding levels and swing points, start with our guides to support and resistance and how to identify a trend, or the Academy lessons on support and resistance and trends.

Browse the six most common shapes below. Tap each one to see its usual bias and what it tends to mean.

Bearish reversal

Price fails at the same high twice, then breaks the low between the two peaks. Buyers tried twice and gave up.

Six classic chart patterns as simple sketches. Tap a pattern to see whether it usually signals a reversal or a continuation, and what the shape says about buyers and sellers.

Chart patterns fall into three families:

Reversal patterns suggest the trend is ending: double tops and bottoms, head and shoulders, and most wedges.
Continuation patterns suggest a pause before the trend resumes: flags, pennants, and ascending or descending triangles that form within a trend.
Two-way patterns say only that a move is coming, not which way: the symmetrical triangle and the range, or rectangle, which our guide to range trading covers in its own right.

A pattern describes what has happened so far and offers an educated guess about what happens next. Plenty of double tops turn into ranges, and plenty of bull flags never resume the trend. Published success rates vary widely between studies, markets and definitions, so treat any single figure with caution. The honest approach is to assume any pattern can fail, and to build every trade so that failure costs a small, known amount.

Double top and double bottom

The double top is the simplest reversal pattern. In an uptrend, price rallies to a high, pulls back, rallies again to roughly the same high, and fails there a second time. Buyers had two chances to push through and could not. The double bottom is the mirror image at the end of a downtrend: two lows at about the same level, with sellers failing twice.

What turns two peaks into a pattern is the dip between them. That low is the pattern’s key line, often called its neckline. While price stays above it, the “double top” is only a market that has stalled twice at resistance, and stalling at resistance is something ranges do every day. The pattern is confirmed only when a candle closes below the neckline. That close tells you the higher lows that defined the uptrend have gone.

Anatomy of a double top (illustrative sketch). Two failed highs make the shape; a close below the neckline confirms it; the height of the pattern, projected down from the break, gives a rough measured-move target.

The measured move

Once the neckline breaks, traders often use a measured move to set a first target: take the height of the pattern, from the tops to the neckline, and project it down from the break. A double top with highs at 1.0900 and a neckline at 1.0840 is 60 pips tall, so the measured move points to about 1.0780.

Treat that number as a rough guide, not a forecast. It is a rule of thumb inherited from the stock market, and nothing makes price stop there. In practice the nearest opposite level usually matters more: if an old support zone sits at 1.0800, many traders take profit just above it rather than hold out for the full 60 pips.

What makes a double top worth trusting

The tops are clear and separate, with a real pullback between them. Two peaks a few candles apart are often just one choppy high.
The second top fails at or below the first. A second peak well above the first is a higher high: the uptrend continuing.
It forms after a real trend. Two equal highs in the middle of a sideways market are just the top of a range.
It shows on the timeframe you trade. A four-hour double top carries more weight than a five-minute one.

The double bottom works the same way upside down: the peak between the two lows is the neckline, a close above it confirms the pattern, and the measured move is projected upwards.

Head and shoulders pattern: three peaks and a neckline

The head and shoulders is the double top’s bigger cousin, and probably the best-known shape on any chart. It has three peaks: a left shoulder, a higher head, and a right shoulder that fails below the head. The two dips between the peaks are joined by a line, the neckline, which may be flat or gently sloped.

Jagged rock peaks in the Dolomites lit from behind by hazy sunlight, above a dark green meadow and a line of pine trees. — Chart patterns borrow their names from familiar shapes. A head and shoulders is a ridge of three peaks with the highest one in the middle.

Read it as an uptrend losing its grip. The left shoulder and head look like normal trend behaviour: a high, a pullback, a higher high. The first warning is the right shoulder, the first rally in a while that fails to make a new high. Confirmation comes when price closes below the neckline, because that close is also the first lower low. It is the same swing-point story as a trend reversal: a lower high, then a break of the last higher low.

A head and shoulders (illustrative sketch). The right shoulder is the first failed high; the close below the neckline is the confirmation. The head-to-neckline height, projected from the break, gives the rough measured-move target.

Three details trip people up:

The neckline does not have to be flat. Join the two dips, whatever angle that gives. If the line you need is steep, look again: you may be forcing the pattern.
The measured move uses the head. Measure from the top of the head down to the neckline, then project that distance down from the break.
Retests are common. Price often rallies back to the underside of the neckline before moving on: old support acting as resistance, as on any broken level.

The inverse head and shoulders is the same pattern upside down at the end of a downtrend: three troughs with the lowest in the middle, confirmed by a close above the neckline that joins the two peaks between them.

A head and shoulders is easy to spot in hindsight and hard to spot in real time. Halfway through the right shoulder you cannot know whether it will fail below the head or rally to a new high, which is exactly why the rule is to wait for the close.

Triangle patterns: ascending, descending and symmetrical

A triangle forms when the distance between highs and lows narrows over time, so that two lines drawn along them converge. It is a picture of a market making up its mind. There are three types, and the difference is which side is giving ground.

The three triangle patterns (illustrative sketches). In an ascending triangle buyers pay more on each dip; in a descending triangle sellers accept less on each rally; in a symmetrical triangle both sides give ground and the break decides.

Ascending triangle. The highs stall at the same flat resistance, but each low is higher than the last. Sellers are defending a fixed price; buyers are willing to pay a little more on every dip. Pressure builds under the ceiling, and the pattern tends to resolve upwards. It is most often treated as a continuation pattern within an uptrend.

Descending triangle. The mirror image: flat support underneath and falling highs above. Buyers keep defending the same floor while sellers grow more aggressive on each rally. It tends to resolve downwards and is most often seen within a downtrend.

Symmetrical triangle. Highs fall and lows rise at roughly the same rate, so neither side is clearly winning. Many traders give the benefit of the doubt to the trend that came before it, but the break itself decides. Planning both outcomes in advance, one trade above the upper line and one below the lower line, avoids guessing.

For all three, confirmation is a candle close beyond the line, not a wick through it. The usual measured move is the height of the triangle at its widest point, where it began, projected from the breakout. The sloping sides are trend lines, and our guide to drawing trend lines covers how many touches you need and how to handle wicks.

Triangles that run almost to the apex, where the two lines meet, often lose their energy, and the eventual break is frequently small and messy. One rule of thumb prefers breaks around two thirds to three quarters of the way along the triangle. Treat that as an observation, not a law.

Flags, pennants and wedges

Flags and pennants are the short, sharp continuation patterns. Both start with a pole: a fast, almost straight move, often on news. Then price pauses. In a flag, the pause is a small channel that drifts gently against the pole, so a bull flag slopes slightly down. In a pennant, it is a tiny symmetrical triangle. Either way, the market is catching its breath before the move resumes.

Triangular pennants in blue, yellow, coral and green flying from thin poles against a clear blue sky. — The patterns take their names from these shapes. A pennant is a small triangle that forms after a sharp move, and a flag is a small sloping channel.

A bull flag and a bull pennant (illustrative sketches). Both begin with a steep pole and pause briefly; the flag drifts in a small channel against the pole, the pennant in a tiny triangle. The pole's length, projected from the breakout, is the rough target.

What separates a real flag from an ordinary dip is proportion. The pole should be steep and the flag shallow and short, giving back only a small part of the pole. If the “flag” retraces half the pole or more, or lasts as long as the pole took to form, it is a correction, not a pause. In a strong trend, flags are one of the cleaner ways to join a move without chasing it, the idea behind pullback trading.

The measured move for a flag or pennant is the length of the pole, projected from the breakout. It is the roughest measured move of all, because poles are often made by a single burst of news that will not repeat. Treat it as an outer estimate.

Wedge patterns

A wedge looks like a triangle tilted to one side: both lines slope the same way and converge. That small difference changes the meaning.

A rising wedge makes higher highs and higher lows, but each push up gains less ground than the last while the lows rise faster. The uptrend is still technically intact, yet it is running out of energy. A close below the lower line is the usual bearish signal.
A falling wedge is the reverse: lower lows that fall by smaller and smaller amounts, with highs falling faster. A close above the upper line is the usual bullish signal.

Rising and falling wedges (illustrative sketches). Both lines slope the same way and converge as each push gains less ground. The break usually comes against the slope: down out of a rising wedge, up out of a falling one.

Wedges can appear at the end of a trend, as reversal patterns, or as a sloping pause against the trend, rather like a long flag. Either way, the break usually comes against the slope. A common rough target is the price where the wedge began.

How to trade chart patterns: confirmation, stops and targets

Recognising a pattern is the easy half. Turning it into a trade means answering three questions before you click anything: what confirms it, where is it proven wrong, and how far can it reasonably go? Get those right and a pattern that fails costs you a small, planned loss.

Confirmation: the close, not the wick

Every pattern has a line that decides it: the neckline of a top or a head and shoulders, the flat edge or a sloping side of a triangle, the upper line of a bull flag. Price spikes through those lines all the time, especially around news, and then snaps back. A breakout only counts when a candle closes beyond the line on the timeframe you are trading.

Confirmation is judged on the close (illustrative sketch). On the left, a wick pierces the neckline but the candle closes back above it, so nothing is confirmed. On the right, a candle body closes below the line, which confirms the break.

A few habits make confirmation more dependable:

Judge the close on the timeframe you chose in advance. A four-hour pattern is confirmed by a four-hour close.
Prefer a clear close. A candle that closes one pip past the line is weaker evidence than one that closes well beyond it with a solid body.
Do not lean on volume. Classic pattern books, written for stock markets, look for rising volume on the break. Spot forex has no central exchange and no single volume figure; platforms show tick volume, a count of price changes, as a stand-in. Treat it as a hint at most.
Consider waiting for the retest. After a break, price often comes back to test the line from the other side. Entering there gives a tighter stop, at the cost of missing moves that never return. Our guide to breakout trading covers fakeouts in depth.

Stops: where is the pattern proven wrong?

A stop loss belongs at the price where the pattern’s story no longer holds, plus a small buffer for the spread and ordinary noise. For most patterns there are two sensible choices.

Beyond the broken line. If price closes back above a broken neckline and keeps going, the break has failed. A stop a little beyond the line, with room for a retest, is fairly tight.
Beyond the last swing of the pattern. Above the right shoulder, or above the second top of a double top. This stop is less likely to be hit by noise, but it is far wider, so the position must be smaller and the target may no longer justify it.

Neither is right in every case. What matters is that you choose before entering and size the trade from the stop. Our guide on where to place a stop loss and the Academy lesson on stop-loss placement go into buffers and spreads in more detail.

Targets: the measured move is a guide

The measured move gives you a reference distance, but look at what sits in the way. If a clear support or resistance level lies between your entry and the measured target, that level is the more realistic first target. Then check the arithmetic: compare the distance to the target with the distance to your stop. If the reward-to-risk ratio is poor, the trade is not worth taking, however clean the pattern looks.

Step through a head and shoulders on GBP/USD to see all three decisions made in order.

Illustrative GBP/USD prices on a four-hour chart. A head and shoulders traded step by step: wait for the close below the neckline, put the stop where the pattern is proven wrong, and let the nearest support, not the measured move, set the target.

The chart shows the version where the pattern worked, which is only one possible ending. Had price climbed back through 1.2723, the stop would have closed the trade for a planned loss. The Academy lesson on chart patterns has a quiz on the same decisions.

Now try a confirmation decision yourself, then let the chart play out.

EUR/USD has made two lows near 1.0800 and rallied back towards 1.0860, the high between them. Is the double bottom confirmed?

Illustrative EUR/USD prices. Two lows near 1.0800 make the shape of a double bottom; the close above the high between them is what confirms it.

Example: sizing a head and shoulders trade on GBP/USD

You have a $5,000 account and risk 1% per trade: $50. On the four-hour chart, GBP/USD has formed a head and shoulders: left shoulder 1.2760, head 1.2810, right shoulder 1.2765, with a neckline at about 1.2700.
A four-hour candle closes at 1.2688, below the neckline. The pattern is confirmed and you sell at 1.2688.
Your stop goes above the neckline, with room for a retest, at 1.2723: a distance of 35 pips.
Size: GBP/USD is quoted in US dollars, so one standard lot is worth $10 a pip. $50 ÷ (35 × $10) = 0.143 lots. Round down to 0.14 lots, worth $1.40 a pip. Actual risk: 35 × $1.40 = $49.
The measured move is the head to the neckline, 1.2810 − 1.2700 = 110 pips, which points to 1.2590. But a support zone sits at 1.2610, so you set the target just above it at 1.2615, 73 pips from entry. If it is hit, the gain is 73 × $1.40 = $102.20, about 2% of the account.
Reward-to-risk is 73 ÷ 35, about 2.1:1, so you need to win roughly one trade in three (about 32%) to break even before costs.

The calculator below starts with the same entry, stop and target. Move the stop to just above the right shoulder, at 1.2775, and the reward-to-risk ratio falls below 1:1: the wider stop is safer from noise, but the target no longer pays for it.

Entry priceStop lossTake profit

Risk

Reward

Reward-to-risk

Win rate needed to break even

Break-even win rate = 1 ÷ (1 + R), where R is the reward-to-risk ratio. Costs push the real figure a little higher.

The order matters: the pattern sets the stop, the stop sets the position size, and the nearest level sets the target. Our guide to position sizing and the Academy lesson on position sizing show the calculation for every pair, and the guide to the risk-reward ratio explains why the break-even win rate matters so much.

Leveraged forex carries a real risk of loss whatever the pattern. Regulators such as the UK’s Financial Conduct Authority require brokers to publish the share of their retail clients who lose money on these products, and it is usually the majority. A clear pattern improves the plan; it does not remove the risk.

Common chart pattern mistakes

Seeing patterns everywhere

The human eye is built to find shapes, and once you have learned a pattern you will start to see it on every chart. That is confirmation bias at work: you notice the evidence that fits and skip the rest. The good patterns are obvious. If you have to squint, redraw the lines twice or switch timeframes to make it fit, it is not there.

Trading the pattern before it is confirmed

Selling the right shoulder because you expect a head and shoulders, or buying inside a flag because you expect a breakout, means taking the pattern’s trade without its evidence. Wait for the close.

Ignoring the bigger picture

A bull flag on the fifteen-minute chart sitting directly under daily resistance is fighting a bigger level. Check the higher timeframe first; the Academy lesson on multi-timeframe analysis gives a simple top-down routine.

Treating the measured move as a promise

Holding out for the full measured move while price stalls at an obvious level, or widening your stop because the target “has not been reached yet”, turns a rough guide into a reason to give back profit.

Not recording what happens

Note every pattern you trade, including the failures. After fifty or a hundred, your trading journal will tell you which shapes behave well on your pairs far better than any general statistic.

Before you move on, see whether you can name the six classic shapes without their labels.

Pattern 1 of 6

Quiz: name each chart pattern from its sketch. Six patterns, three options each; your score appears at the end.

Frequently asked questions

What are the most reliable chart patterns?

No pattern is reliable on its own, and published success rates vary widely with the market, timeframe and definition. The easiest to use have one clear line and a clean break: double tops and bottoms, head and shoulders, and flags in strong trends. Reliability comes from waiting for the close and always using a stop.

Do chart patterns work in forex?

They can help organise support, resistance and trend into a plan, but they do not predict the future, and many fail. Patterns tend to be cleaner on liquid major pairs and on the four-hour and daily charts. Treat each one as a setup with a defined stop, not a forecast.

How do you confirm a chart pattern?

Wait for a candle to close beyond the pattern's key line on the timeframe you are trading: below the neckline for a double top or head and shoulders, above the flat top of an ascending triangle, above the upper line of a bull flag. A wick through the line that closes back inside the pattern does not count.

What is a measured move in chart patterns?

A measured move is a rough target: the height of the pattern projected from the breakout point. For a head and shoulders it is the distance from the head to the neckline; for a flag, the length of the pole. It is a rule of thumb, so check for support or resistance in the way before relying on it.

What is the difference between a flag and a pennant?

Both are short pauses after a sharp move, called the pole. In a flag the pause is a small channel sloping against the pole; in a pennant it is a tiny symmetrical triangle. They are read the same way: a close beyond the pattern in the direction of the pole suggests the move is resuming.

Is a head and shoulders pattern bullish or bearish?

A normal head and shoulders, with three peaks, is a bearish reversal pattern that forms after an uptrend. The inverse head and shoulders, with three troughs, is its bullish mirror image after a downtrend. Either one is confirmed only when price closes through the neckline, and either can fail.