Chart Patterns Flashcards
7 cards from real Day Trading practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Chart Patterns flashcards as text
A 'falling wedge' in a downtrend is generally considered what type of signal?
Answer: Bullish reversal
A falling wedge in a downtrend is a bullish reversal pattern because converging downward trendlines show diminishing selling pressure before a breakout higher.
What does the 'neckline' represent in a head and shoulders pattern?
Answer: The support level connecting the lows between the shoulders and head
The neckline connects the two reaction lows between the left shoulder, head, and right shoulder, and its break confirms the bearish reversal.
In day trading, which candlestick pattern is known as a 'spinning top' and what does it suggest?
Answer: A candle with a small body and long equal upper and lower shadows, suggesting indecision
A spinning top has a small real body with long upper and lower shadows of roughly equal length, indicating indecision between buyers and sellers.
What is the key difference between a 'reversal gap' and a 'continuation gap' (runaway gap)?
Answer: Reversal gaps occur at the start of a trend; continuation gaps occur mid-trend
Reversal (breakaway) gaps appear at the start of a new trend from consolidation, while continuation (runaway) gaps appear in the middle of an established trend.
Which pattern forms when price makes lower highs and higher lows, converging toward an apex?
Answer: Symmetrical triangle
A symmetrical triangle features lower highs and higher lows converging to an apex, showing balanced pressure between buyers and sellers before a breakout.
What does a 'shooting star' candlestick pattern indicate when it appears after a rally?
Answer: Bearish reversal — buyers pushed price up but sellers rejected the move
A shooting star after a rally indicates buyers drove price higher during the session, but sellers overwhelmed them to close near the open, signaling a bearish reversal.
When analyzing an intraday chart, which pattern is known as an 'inside bar' and what does it signal?
Answer: A bar whose high and low are entirely within the prior bar's range, signaling consolidation or potential breakout
An inside bar is completely contained within the prior bar's high-to-low range, indicating consolidation and a potential breakout in either direction.