If you just started trading, you need to know the 10 common chart patterns that traders frequently use because they make reading charts much easier.

Chart patterns are divided into 3 main categories — the first is Reversal Patterns, which indicate that the trend is about to change; the second is Continuation Patterns, which show that the trend will continue in the same direction; and the third is Bilateral Patterns, where the direction is still uncertain.

Starting with Head and Shoulders — this is a very strong signal for a reversal from an uptrend to a downtrend. You’ll see three high points, with the middle being the highest. When the price breaks below the neckline, it confirms that the trend has changed.

Conversely, there is the Inverse Head and Shoulders, which indicates a reversal from a downtrend to an uptrend — like a mirror image of the first pattern.

Double Top is similar to Head and Shoulders but has only two high points. It forms faster but also signals a reversal to a downtrend. The Double Bottom is the opposite — two low points followed by a price increase.

There is also the Cup or Rounding Bottom pattern — this involves a gradual price decline followed by a slow curve back up. When the price breaks above the neckline, it confirms a trend reversal to an uptrend.

Cup and Handle is like the Cup pattern but with an additional step — after the curve back up, the price dips slightly again (like the handle of a cup) before rising further. This is a continuation pattern indicating that the uptrend will likely continue.

Flag patterns can be used in both uptrends and downtrends — they show a brief pause or consolidation. When the price breaks out of the flag, it resumes the previous trend.

There are three types of triangles — Ascending Triangle, which indicates a continuation of the uptrend (higher lows but the same highs); Descending Triangle, which indicates a continuation of the downtrend (lower highs but the same lows); and Symmetrical Triangle, where the price converges from both sides, and the direction is uncertain.

For traders, these chart patterns are tools that help improve market reading skills. They are not complicated and are effective. The challenge is practicing to become proficient because interpreting chart patterns requires experience. But if you study diligently, it’s not difficult.