Reversal chart patterns: double top, double bottom and head and shoulders

Chart patterns vs candlestick patterns

Candlestick patterns form from one to three candles. Chart patterns form from many candles across several swing highs and lows, so they only become visible after you have already learned to spot support, resistance and trend structure.

Double top

A double top forms after an uptrend, when price makes a high, pulls back, then rallies again to roughly the same high and fails a second time — an "M" shape. The level connecting the low between the two peaks is the neckline. The pattern is confirmed once price closes below the neckline, not just when the second peak forms.

Double bottom

A double bottom is the mirror image after a downtrend: two lows near the same level with a peak between them, a "W" shape. The neckline is the level of that peak, and the pattern confirms when price closes above it.

Head and shoulders

A head and shoulders forms after an uptrend, with three peaks: a left shoulder, a higher head in the middle, and a right shoulder close to the height of the left shoulder. The neckline connects the two lows on either side of the head. A break below the neckline signals the uptrend may be reversing. The inverse head and shoulders is the same idea after a downtrend, signaling a possible move up.

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