Chart Pattern
Recurring price formations (triangles, flags, head-and-shoulders) traders use to anticipate moves — with mixed evidence.
Chart patterns are recognizable price formations — triangles, flags, wedges, double tops, head-and-shoulders — that technical analysts believe hint at likely continuation or reversal. They encode crowd psychology into shapes: a consolidation triangle as indecision resolving, a head-and-shoulders as a failing uptrend.
The evidence for their predictive power is genuinely mixed and pattern-dependent; much of their apparent success is confirmation bias (remembering the ones that worked) and self-fulfillment (enough traders act on them to move price). They’re most defensible as a shared vocabulary for describing structure and framing risk, not as a reliable forecasting system. Treat a “textbook pattern” as a hypothesis to be confirmed, not a prediction to bet the account on.