What Does Reversal Chart Pattern Mean?

Reversal Patterns confirm the reversal of the stocks market stocks trend once this reversal pattern setup is confirmed.

These reversal chart patterns are formed after extended stocks market stocks trend either upward or downwards and these reversal chart patterns signal that the stocks market stocks trend is ready to reverse.

1. Reversal Chart Patterns

• Double Top Reversal Patterns

• Double Bottoms Reversal Patterns

• Head & Shoulders Reversal Patterns

• Reverse Head & Shoulders Reversal Patterns

Double Tops

Double tops stocks chart pattern is a reversal pattern which forms after an extended upwards stock trend. As its name implies, this formation is made up of 2 consecutive peaks which are roughly equal, with a moderate trough between.

Summary:

• Double tops stocks pattern forms after an extended move upwards
• Double tops stocks pattern formation indicates that there will be a reversal in the stocks market
• We sell when the price breaks-out below neck-line: see below for explanation.

Example of Double Tops Reversal Chart Pattern on a Stocks Chart

Double Bottom

Double bottoms stocks chart pattern is a reversal pattern which forms after an extended downwards stock trend. It is made up of 2 consecutive troughs which are roughly equal, with a moderate peak between.

Summary:

• Double bottom stocks pattern forms after an extended move downwards
• Double bottom stocks pattern formation indicates that there will be a reversal in the stocks market
• We buy when price breaks-out above the neck-line: see below for the explanation.

Example of Double Bottoms Reversal Chart Pattern on a Stocks Chart

Head & Shoulders Trading Pattern

Head & Shoulders chart pattern is a reversal chart pattern which forms after an extended Stocks upward stock trend. It is made up of three consecutive peaks, the left shoulder, the head & the right shoulder with 2 moderate troughs between the shoulders.

Summary:

• Head & Shoulders chart pattern forms after an extended move upwards
• Head and Shoulders pattern formation indicates that there will be a reversal in the stocks market
• Head and Shoulders stocks pattern formation resembles head with shoulders thus its name.
• To draw the neckline we use chart point 1 & point 2 as displayed below. We also extend this line in both directions.
• We sell when the price breaks below the neck line: see the chart below for explanation.

Example of Head & Shoulders Reversal Chart Pattern on a Stocks Chart

Reverse Head & Shoulders Trading Pattern

Reverse Head & Shoulders chart pattern is a reversal head & shoulders pattern which forms after an extended Stocks downward stock trend. It resembles an upside down head shoulders.

Summary:

• Reverse Head & Shoulders chart pattern forms after an extended move downwards
• Reverse Head & Shoulders pattern formation indicates that there will be a reversal in the stocks market
• Reverse Head & Shoulders stocks pattern formation resembles upside down, thus the name Reverse.
• We buy when price breaks above the neck line: see the chart below for explanation.

Example of Reverse Head and Shoulders Reversal Chart Pattern on a Stocks Chart

Reversal Patterns Tutorials

Double Top Patterns and Double Bottoms Chart Patterns

Head and shoulders Stock Patterns & Reverse Head & Shoulders Chart Patterns