Chart patterns

To be a price action trader means having a deep understanding of the various different price action patterns that form in the market.
As some of you reading this will probably already know, there are three basic types of pattern that can form in the market:
• Price Action Reversal Patterns
• Price Action Continuation Patterns
• Price Action Candlestick Pattern

Price Action Reversal Patterns

Reversal patterns are probably the most important set of price action patterns you need to really have a deep understanding of, as they can give you early clues about a movement in the market that is coming to an end. The six patterns I'm going to be showing you in this section are all multi-swing shape patterns, which means that each one of the patterns forms from more than one upswing and downswing taking place in the market, and they all look similar to common shapes upon their completion.

The Head And Shoulders Pattern

The first price action reversal pattern we're going to look at is the head and shoulders pattern. Without doubt one of the most popular and well known price action patterns in the market, the head and shoulders formation is one which all price action traders need to memorize and understand if they want to become good at spotting reversals using price action. As you've probably already guessed, the head and shoulders pattern is a reversal pattern which has a swing structure very similar to that of person's head and shoulders.