Chart Patterns

What this unit covers

Learn to recognise common chart patterns, such as double top, double bottom and head and shoulders, by their shape on a real price chart.

By the end you will be able to

• Explain that a chart pattern records past buyer and seller behavior, not a prediction.
• Identify a double top, double bottom, and head and shoulders by their peaks, troughs, and neckline.
• Apply a pause for confirmation and a risk plan before acting on a spotted pattern.

How it starts: A Shape Before the Fall

1. A stock rises to 480 rupees, falls back, then rises to 478 rupees again.
2. The price then falls below 440 rupees, the low point between the two peaks.
3. Would you have noticed this shape before the price fell?

Words you will meet

Chart pattern

A recognizable shape in a price chart formed by repeated buyer or seller behavior at a price level.

Double top

Two peaks near the same price that both fail to push higher, with a dip between them.

Double bottom

Two troughs near the same price that both fail to fall lower, with a rise between them.

Head and shoulders

Three peaks where the middle one is taller than the two on either side.

Neckline

The price level joining the lows or highs between the peaks or troughs of a pattern.

In this module: Reading Charts

1. Chart Patterns (this unit)
2. Breakouts
3. Pullbacks
4. Volume Confirmation