How to Read Reversal Chart Patterns for Beginner Traders

The common reversal chart patterns used to trade stock index that beginner stock index trades should know are described below.

Reversal Trading Patterns

The commonly used stock index reversal chart patterns are:

Double Tops Reversal Chart Pattern

Double tops stock index chart pattern is an M shaped 2 tops or 2 peaks pattern that forms on the stock index trading price chart during a upward stock index trend.

Double tops stock index pattern is a bearish stock index pattern that forms when price reaches a resistance zone.

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

Double Bottoms Reversal Chart Pattern

Double bottom stock index chart pattern is a W shaped two bottoms or two lows stock index pattern that forms on the stock index trading price chart during a downward stock index trend.

Double bottom stock index chart pattern is a bullish stock index pattern that forms when price reaches a support zone.

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

Head & Shoulders Reversal Chart Pattern

Head & Shoulders pattern is a bearish reversal pattern that forms after a upward stock index trend.

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

The lowest points between the two stock index trading price lows forms the neckline & the reversal stock index trading signal from this head and shoulders reversal chart pattern is confirmed once stock index trading price moves below this neckline.

Reverse Head and Shoulders Reversal Chart Pattern

Reverse Head & Shoulders chart pattern is a bullish reversal chart pattern that forms after a downward stock index trend.

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

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

How to Read Reversal Chart Patterns for Beginner Traders