Crypto glossary
Chart patterns
Chart patterns are recurring price formations, such as head and shoulders, triangles, flags and double tops, that traders use to anticipate the next move.
Technical analysts sort patterns into two families. Reversal patterns, such as head and shoulders, double tops and double bottoms, suggest that a trend is ending. Continuation patterns, such as flags, pennants and many triangles, suggest a pause before the trend resumes. Each has a typical shape, a boundary whose break confirms it and a conventional way of measuring a price target, usually by projecting the pattern's height.
In crypto, patterns are a staple of market commentary and social media charts, applied to everything from bitcoin's weekly chart to new memecoins. Because so many traders watch the same formations, their completion can trigger clusters of orders and stops at predictable levels.
Patterns are easier to spot in hindsight than in real time, and many fail. Studies of their reliability give mixed results, and outcomes depend heavily on volume, timeframe and context. Most practitioners treat a pattern as a setup that needs confirmation and a stop, not as a prediction.
Example
An analyst points out a symmetrical triangle forming on ETH's four-hour chart over two weeks. When price closes above the upper line, traders measure the triangle's widest point to set a target.
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