Chart Patterns

Head and shoulders, triangles, flags.

Head and shoulders: two failed pushes around one higher one neckline Three pushes up, the middle one highest, the third failing lower. Breaking the neckline says buyers are exhausted. Double top / bottom Two attempts at the same level, both rejected. Simpler and more common than the three-push version. Ascending triangle A flat ceiling with rising lows. Buyers keep paying more while sellers hold one price. Usually resolves upward. Descending triangle The mirror image, usually resolving downward. Symmetrical triangle Both sides converging. Says nothing about direction, only that a decision is coming. Flag / pennant A sharp move, then a tight drift against it. Often continues in the original direction. Wedge Both lines slope the same way but converge. A rising wedge in an uptrend is a warning: gains are shrinking. Patterns are the most seductive part of technical analysis and the part with the weakest evidence. The human eye finds shapes in randomness effortlessly. Treat a pattern as a hypothesis that needs volume and a level to back it, never as a reason on its own.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Charts.