Chart Patterns

Psychology Behind Chart Patterns

Every pattern tells a story.

If price is rising and then starts forming a reversal pattern, it might indicate that buyers are losing strength or institutions are booking profits.

If price is consolidating in a continuation pattern, it signals that the market is resting before the next big move.

Key psychological elements include:

Support – A price level where buyers consistently enter

Resistance – A price level where sellers consistently enter

Breakout – When price moves above resistance

Breakdown – When price moves below support

Retest – Price returning to confirm a breakout or breakdown

Volume – Strengthens validity of patterns

The combination of these elements creates chart patterns that traders learn to interpret.