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Technical analysis

Chart pattern

By Jarosław Wasiński • Published: • Updated:
An identified structure in past price movements, such as a flag, triangle or double top. Continuation and reversal names describe conventional interpretations, not certain outcomes. Specify identification criteria, recognition timing and the complete trading rule. Catalogue statistics do not establish universal probabilities for another market.
Example. Two peaks near 1.1050 with an intervening trough at 1.1000 form a candidate double top. A rule requiring a close below 1.1000 has no signal before that close. Seeing the later chart does not justify labelling a completed pattern at the second peak.

Make the description reproducible

Define extremes, price tolerance, minimum bar count and expiry. Flags, triangles and head-and-shoulders structures have detailed criteria that can differ between authors. A “continuation” or “reversal” category expresses a conventional hypothesis, not the mandatory direction after identification. Record the version being tested rather than changing the label after the result.

Measured target versus realised outcome

Pattern height can define a target projection. It does not mean price must reach that level or that distance from the actual entry creates an edge. Separate the initial break, retest and close-based decision: they produce different prices, timing and missed trades.

Comparing performance

Specify whether success means a target touch, positive net P&L or merely a move in the projected direction. Include every qualifying pattern, costs and swing-label availability. A statistic from another market or catalogue does not automatically transfer to FX; evaluate the relevant sample and uncertainty without assigning a predetermined success rate.

FAQ

Is a pattern’s name enough to trade it?
No. Identification, signal timing, execution, risk and exit rules are needed.
Does a continuation pattern rule out reversal?
No. Its conventional interpretation needs evaluation across all qualifying cases.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
  • Advocate for market transparency, promoting education grounded in hard data and institutional reports (BIS, ESMA, CFTC).

All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.