Common Trading Patterns

What are trading patterns?

Patterns are the distinctive formations created by the price action of any asset
pair. A pattern can be identified by a line that connects common price points,
such as closing prices or highs or lows, during a specific period of time.
Traders look for these patterns as a way to anticipate future price movement.

Common Pattern Examples:

1. Ascending triangle

The ascending triangle is usually a bullish pattern that will break out upward
when price gets to the last 26% of the triangle. (Apex). To draw this pattern, you
need to place a horizontal line (the resistance line) on the resistance points and
draw an ascending line (the uptrend line) along the support points.

2. Descending triangle
A descending triangle is usually a bearish pattern. WHen rice gets to the apex it
usually breaks downward.

3. Symmetrical triangle
For symmetrical triangles, two trend lines start to meet which signifies a breakout
in either direction. The support line is drawn with an upward trend, and the
resistance line is drawn with a downward trend. Even though the breakout can
happen in either direction, it often follows the general trend of the market.
4. Flags
Flags are usually continuation patterns. They are formed when you have a large
move in a certain direction that ends up forming a channel for a period of time
before breaking out and continuing the trend.

6. Wedges

A wedge is a tightening of price action between two trend lines. It can be either a rising
wedge or a falling wedge. For a downward wedge, price will usually break out and go

higher. The opposite is true for a rising wedge. This pattern usually signifies a trend
reversal.
7. Cup and handle

The cup and handle is a well-known continuation stock chart pattern that signals a
bullish market trend.
8. Head and shoulders

The head and shoulders pattern​ tries to predict a bull to bear market reversal.

Characterised by a large peak with two smaller peaks either side, all three levels

fall back to the same support level. The trend is then likely to breakout in a

downward motion.
Market Cipher Confluence

As you watch these patterns forming on the chart, look at MCB to determine

if/when the breakout will happen and in what direction it will happen.

Combining patterns with MC can allow you to enter the breakout before the

breakout!

Some Examples: