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The descending Wedge is a bullish pattern that begins wide at the top and contracts as prices move lower. This price action forms a cone that slopes down as the reaction highs and reaction lows converge. In contrast to symmetrical triangles, which have no definitive slope and no bias, falling wedges definitely slope down and have a bullish bias.

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An ascending channel is the price action contained between upward sloping parallel lines. Higher highs and higher lows characterize this price pattern. Technical analysts construct an ascending channel by drawing a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. The pattern’s opposite counterpart is the...

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KEY TAKEAWAYS Symmetrical triangles occur when a security's price is consolidating in a way that generates two converging trend lines with similar slopes. The breakout or breakdown targets for a symmetrical triangle is equal to the distance between the initial high and low applied to the breakout or breakdown point. Many traders use symmetrical triangles in...

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KEY TAKEAWAYS A head and shoulders pattern is a chart formation that resembles a baseline with three peaks, the outside two are close in height and the middle is highest. A head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal. The head and shoulders pattern is believed to be one of the most reliable...

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The bear flag pattern highlights a trading environment where the supply and demand balance has shifted badly in one direction of the market (supply > demand). In turn, this will produce very little upside retracement, which allows the flag structure to take shape.

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One thing experienced traders love about this pattern is that once the breakdown happens, the target is reached very quickly. Unlike other patterns, where a confirmation must be shown before a trade is taken, wedges often do not need confirmations; they normally break and drop fast to their targets. Targets are usually located at the beginning of the upper...

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KEY TAKEAWAYS A descending channel is drawn by connecting the lower highs and lower lows of a security's price with parallel trendlines to show a downward trend. Traders who believe a security is likely to remain within its descending channel can initiate trades when the price fluctuates within its channel trendline boundaries. A more potent signal occurs with a...

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KEY TAKEAWAYS Wedge patterns are usually characterized by converging trend lines over 10 to 50 trading periods. The patterns may be considered rising or falling wedges. The patterns have an unusually good track record for forecasting price reversals.

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KEY TAKEAWAYS A descending channel is drawn by connecting the lower highs and lower lows of a security's price with parallel trendlines to show a downward trend. Traders who believe a security is likely to remain within its descending channel can initiate trades when the price fluctuates within its channel trendline boundaries. A more potent signal occurs with a...

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KEY TAKEAWAYS An ascending channel is used in technical analysis to show an uptrend in a security’s price. It is formed from two positive sloping trend lines drawn above and below a price series depicting resistance and support levels, respectively. Channels are used commonly in technical analysis to confirm trends and identify breakouts and reversals.

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KEY TAKEAWAYS The trendlines of a triangle need to run along at least two swing highs and two swing lows. Ascending triangles are considered a continuation pattern, as the price will typically breakout of the triangle in the price direction prevailing before the triangle. Although, this won't always occur. A breakout in any direction is noteworthy. A long trade is...

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