How to Read Reversal Chart Patterns for Beginners

The common reversal chart setups used to trade that beginner trade transactions should know are described below.

Reversal Setup Patterns

The commonly used reversal chart setups are:

Double Tops Reversal Pattern

Double tops chart pattern is an M shaped 2 tops or two peaks pattern setup which forms on the price chart during a upward trend.

Double tops chart pattern setup is a bearish pattern that forms when price reaches a resistance zone.

The price will move up & then dip slightly then turn up & move upward to the top level where it had reached or slightly below this level then move down again forming what is known as a double top chart pattern setup.

Double Bottoms Reversal Chart Pattern

Double bottom chart pattern setup is a W shaped two bottoms or two lows pattern setup which forms on the price chart during a downward trend.

Double bottom pattern setup is a bullish pattern that forms when price reaches a support zone.

The price will move down in then move upwards slightly then turn downward & move down to the bottom level where it had reached or slightly above this level then move upwards again forming what is known as a double bottom chart pattern setup.

Head & Shoulders Reversal Pattern

Head & Shoulders chart pattern setup is a bearish reversal pattern that forms after a upwards trend.

There is an initial peak which is the first shoulder then a slight dip in price, then a second higher peak which is the head then another price dip followed by last peak in price which is the second shoulder.

The lowest points between the two price lows forms the neck line and the reversal gold signal from this head and shoulders reversal chart pattern setup is confirmed once price moves below this neck-line.

Reverse Head and Shoulders Reversal Chart Pattern

Reverse Head and Shoulders pattern setup is a bullish reversal chart pattern setup that forms after a downward trend.

There is an initial dip which is the first inverse shoulder then a slight peak in price, then a second lower dip which is the reverse head and then another price peak followed by last price dip in price which is the second inverse shoulder.

The highest points between the two price peaks forms the neck-line and the reversal gold signal from this reverse head and shoulders pattern is confirmed once price moves above this neck-line.

How Do I Read Reversal Chart Patterns for Beginners