Chart Patterns based on Trendline Pairs Cheat Sheet

Chart Patterns Collage

Summary Table for Chart Pattern Classification Rules

This post in relation to our guide on spotting chart patterns on the subject of Chart Patterns

The article only covers the patterns created from the trend line pairs. The following types of patterns are not covered under this article.

  • Flag Patterns and Pennants
  • Head and Shoulders and the Inverse
  • Double top and Double bottom
  • Triple Top and Triple bottom
  • Cup and Handle and the Inverse
  • Rounding Bottom and Top Patterns

The above patterns are not based on the trend line pairs, or they are extension to the trend line pair based patterns that depend on the price movements or the trends prior to the patterns. They will be covered under a different article.

In the current article, we concentrate on the wedge patterns, symmetrical triangles and price channels

Here is a simple table to remember the correlation of recognizable stock chart patterns

PatternUpper Trend LineLower Trend LineRelation between trend Lines
Rising Wedge (Contracting)RisingRisingContacting
Rising Wedge (Expanding)RisingRisingExpanding
Falling Wedge (Contracting)FallingFallingContracting
Falling Wedge (Expanding)FallingFallingExpanding
Converging TriangleFallingRisingContracting
Diverging TriangleRisingFallingExpanding
Ascending Triangle (Contracting)FlatRisingContracting
Ascending Triangle (Expanding)RisingFlatExpanding
Descending Triangle (Contracting)FallingFlatContracting
Descending Triangle (Expanding)FlatFallingExpanding
Uptrend/Ascending ChannelRisingRisingParallel
Downtrend/Descending ChannelFallingFallingParallel
Ranging ChannelFlatFlatParallel

Details with Examples of Each Patterns

Once we identify the direction and characteristics of trend lines, we can go on and classify the pattern in following categories.

Rising Wedge (Contracting)

Rules for Contracting Rising Wedge PatternĀ are as follows:

  • Both Trend Lines are Rising
  • Trend Lines are converging.

Contracting Rising Wedge

Rising Wedge (Expanding)

Rules for the Expanding Rising Wedge are as follows:

  • Both Trend Lines are rising
  • Trend Lines are diverging.

Expanding Rising Wedge

Falling Wedge (Contracting)

Rules for the Contracting Falling Wedge are as follows:

  • Both Trend Lines are falling
  • Trend Lines are contracting.

Contracting Falling Wedge

Falling Wedge (Expanding)

Rules for the Expanding Falling Wedge are as follows:

  • Both Trend Lines are falling
  • Trend Lines are diverging.