The Named Chart Patterns, Defined Exactly
Each named chart pattern has a geometric condition that can be checked and a single price whose break confirms it. A head and shoulders needs a middle peak higher than both others and a neckline; an ascending triangle needs equal highs and rising lows; a cup and handle needs a shallow pullback after a rounded base.
Most descriptions of these are pictures with arrows. This page gives each one a condition you could check with a ruler, and the single price its break turns on.
How it works
Every pattern below has two parts: a geometric condition that either holds or does not, and one price whose break is the only event in it.
Write the condition down before you look for the shape. That is the whole method, and it is what separates identifying a pattern from noticing one.
Head and shoulders
The condition: three peaks, the middle one strictly higher than both others, and the two outer peaks within about a tenth of each other. On this chart: head at 101.09, shoulders at 100.73 and 100.74.
The price: the neckline, drawn through the two lows between the peaks — 100.12 here. Until price closes below it there is no pattern, only three peaks.
Ascending triangle
The condition: highs at effectively the same price, and lows that visibly rise. On this chart the three highs sit within 0.01 of each other while the lows go 99.77 → 100.01 → 100.16.
The price: the flat side. A descending triangle is the same thing upside down — flat lows, falling highs — and the price is the flat side there too.
Cup and handle
The condition: a rounded decline and recovery back to roughly the starting high, then a shallow pullback. “Shallow” is the part usually left vague — here the handle is 0.36 against a cup depth of 1.18, about 31%.
A handle as deep as the cup is not a handle, it is a second cup. Fixing a number, any number, is what makes the pattern checkable.
The price: the rim, the high the cup returned to.
Rising wedge
The condition: highs rising, lows rising, and the distance between them shrinking. On this chart the range went from 1.06 to 0.52 — halved.
Both sides rising is what distinguishes it from a triangle. It is read as bearish, which is unusual: a shape made entirely of higher highs and higher lows that is taken as a warning.
The price: the lower side, which is a rising line rather than a horizontal one — and everything on the trend lines page about redrawing a line applies here in full.
They all end the same way
Strip the names and each of these is: a level, and a close through it.
That is the argument the chart patterns page makes at length, and putting four definitions side by side is the fastest way to see it. The geometry tells you where to draw the line. The line is the trade.
The measured move, pattern by pattern
Each shape comes with a target convention, and they are all the same idea wearing four costumes.
Head and shoulders: the distance from the head down to the neckline, projected down from the break. On this chart that is 101.09 − 100.12 = 0.97.
Ascending triangle: the height of the triangle at its widest, projected up from the flat side.
Cup and handle: the depth of the cup — 1.18 here — projected up from the rim.
Rising wedge: conventionally the full height of the wedge at its widest, 1.06, projected down.
Notice that every one of them is “the height of the thing, added to the break”. There is no separate theory behind any of the four, and there is nothing in a market that makes the next move the same size as the last one.
What the convention is genuinely good for is fixing a number before you enter, which is the argument the entry and exit page makes: a target chosen while you are flat beats one chosen while you are in profit and nervous.
A worked example
State the condition before you look. Head higher than both shoulders; shoulders within a tenth.
Check it against the chart in front of you. If the head is not the highest peak, it is not this pattern, and calling it one anyway is the failure this whole page exists to prevent.
Mark the price. One line, and write the number down.
Wait for a close through it, with the breakout page’s caveats — a wick is not a break, and most breaks fail.
Then the stop goes back inside the shape, because if price returns there the break did not happen.
The original data
Across our study of 24,971 trading videos, 263 cover the named patterns. The median one gets 2,702 views, 86% never pass 50,000, and the median length is 7.6 minutes.
The corpus carries description text for 245 of those 263 — almost the entire field — and across those 245, 13 mention invalidation, failure, or what a bad read looks like.
Thirteen is one of the higher absolute counts in this glossary and it is still about one in nineteen.
When it fails
The same bars are several patterns at once
One chart, three names. The two shoulders are a double top; add the head and it is a triple top; order them by height and it is a head and shoulders.
All three descriptions are correct, and they carry different implied directions. The shape did not choose; you did.
The definitions have no thresholds
How much higher must the head be? How equal is “equal”? Almost no source says. This page picked numbers so the patterns could be checked, and those numbers are conventions rather than discoveries.
The pattern completes and does the opposite
Covered on the chart patterns page and true of every shape here. A completed pattern is a level that broke, and levels that break sometimes break back.
You named it before it finished
At the right shoulder there is no pattern — there is a market that has made three peaks and might do anything. The name arrives with the break, and by then the entry is a break entry like any other.
Related
Chart patterns is the argument that all of these reduce to levels, with the double top worked through in full.
Support and resistance is what every line on this page actually is.
And breakout is the event each of these patterns is waiting for.
The reason I wanted these written down precisely is that vague definitions are how you end up seeing a pattern in anything. If the rule says the head has to be higher than both shoulders, then a chart where it is not is simply not that pattern, and I have talked myself into plenty of trades by being loose about exactly that. Writing the condition down is most of the discipline.
— Michael Whitman, from this video
This page is educational, not financial advice. Test every idea on your own charts before risking money.