Chart Patterns Guide
Entry & Exit Strategies with Visual Examples
NSE / BSE Intraday & Swing Trading
1. What Are Chart Patterns?
Chart patterns are visual formations created by price movements on a chart. They help traders predict where
price is likely to go next, giving clear signals for entry and exit points.
• Continuation Patterns: Price continues in the same direction (Flags, Triangles)
• Reversal Patterns: Price changes direction (Head & Shoulders, Double Top/Bottom)
BULLISH PATTERNS — BUY (LONG) SETUPS
Pattern 1: Double Bottom (W Shape)
Price hits the same low twice, then bounces up. The second bottom signals that sellers are exhausted and buyers
are taking control.
Entry & Exit:
• ENTRY: Buy when price breaks and closes ABOVE the neckline with volume
• STOP LOSS: Just below the second bottom
• TARGET: Add the height (Bottom to Neckline) above the neckline breakout
Pattern 2: Bullish Flag
After a strong upward move (the pole), price consolidates in a slight downward channel (the flag) before
continuing higher. This is one of the most reliable intraday patterns.
Entry & Exit:
• ENTRY: Buy on breakout above the upper flag trendline with volume surge
• STOP LOSS: Below the lower flag trendline
• TARGET: Add the flagpole height to the breakout point
Pattern 3: Ascending Triangle
A flat resistance level on top with rising lows. Buyers are getting more aggressive each time, pushing the low
higher until price finally breaks resistance.
Entry & Exit:
• ENTRY: Buy on breakout above the flat resistance with increased volume
• STOP LOSS: Below the last swing low inside the triangle
• TARGET: Add triangle height to the breakout level
Pattern 4: Cup & Handle
A rounded bottom (cup) followed by a small pullback (handle). Common in swing trading. Breakout above the cup
rim signals a strong upward move.
Entry & Exit:
• ENTRY: Buy on breakout above the cup rim / handle resistance
• STOP LOSS: Below the handle low
• TARGET: Add cup depth to breakout point
Pattern 5: Bullish Engulfing Candle
A large green candle completely covers the previous red candle. Signals a sudden shift from sellers to buyers.
Most powerful when it occurs at a support level.
Entry & Exit:
• ENTRY: Buy at open of next candle OR on breakout above the engulfing high
• STOP LOSS: Below the low of the engulfing candle
• TARGET: Previous swing high or 1:2 risk-reward ratio
BEARISH PATTERNS — SELL (SHORT) SETUPS
Pattern 6: Head & Shoulders
Three peaks — the middle one (head) is the highest, flanked by two lower peaks (shoulders). The most reliable
reversal pattern in technical analysis.
Entry & Exit:
• ENTRY (SELL): Sell when price breaks below the neckline with volume
• STOP LOSS: Above the right shoulder high
• TARGET: Measure head-to-neckline height, project downward from breakout
Pattern 7: Double Top (M Shape)
Price fails to break the same resistance level twice and reverses down. The mirror image of the Double Bottom —
very reliable at major resistance zones.
Entry & Exit:
• ENTRY (SELL): Sell when price breaks below the neckline (trough between the two tops)
• STOP LOSS: Above the second top
• TARGET: Project the top-to-neckline height downward from breakout
Pattern 8: Bearish Flag
After a sharp drop (pole), price consolidates in a slight upward channel (flag) before continuing lower. Common
and highly reliable on intraday charts.
Entry & Exit:
• ENTRY (SELL): Sell on breakdown below the lower flag trendline
• STOP LOSS: Above the upper flag trendline
• TARGET: Subtract the flagpole height from the breakdown point
Pattern 9: Descending Triangle
A flat support level at the bottom, with lower highs forming a falling resistance line. Sellers are consistently
pushing price down until support breaks.
Entry & Exit:
• ENTRY (SELL): Sell on breakdown below flat support with high volume
• STOP LOSS: Above the last lower high inside the triangle
• TARGET: Subtract triangle height from the breakdown level
Pattern 10: Bearish Engulfing Candle
A large red candle completely engulfs the previous green candle. Signals strong and sudden selling pressure.
Most powerful at resistance levels or after an uptrend.
Entry & Exit:
• ENTRY (SELL): Sell at open of next candle OR on breakdown below the engulfing low
• STOP LOSS: Above the high of the engulfing candle
• TARGET: Previous swing low or 1:2 risk-reward ratio
Quick Reference Table
Pattern Type Entry Signal Stop Loss
Double Bottom Bullish Reversal Break above neckline Below 2nd bottom
Break above upper
Bullish Flag Bullish Continuation Below lower channel
channel
Break above flat
Ascending Triangle Bullish Continuation Below last swing low
resistance
Cup & Handle Bullish Continuation Break above cup rim Below handle low
Open of 3rd candle / high
Bullish Engulfing Bullish (Candle) Below engulfing low
break
Head & Shoulders Bearish Reversal Break below neckline Above right shoulder
Double Top Bearish Reversal Break below neckline Above 2nd top
Break below lower
Bearish Flag Bearish Continuation Above upper channel
channel
Descending Triangle Bearish Continuation Break below flat support Above last lower high
Open of 3rd candle / low
Bearish Engulfing Bearish (Candle) Above engulfing high
break
Risk Management
Position Sizing Formula:
Shares = (Capital × Risk %) ÷ (Entry Price − Stop Loss Price)
Example: Capital ₹1,00,000 | Risk 1% = ₹1,000 | Entry ₹3768 | SL ₹3748 | Risk/share = ₹20 → Buy 50 shares
• Never risk more than 1–2% of capital per trade
• Always set stop loss BEFORE entering
• Minimum risk-reward ratio: 1:2
• Never trade against the higher timeframe trend
• Confirm patterns with volume + RSI before entry
Disclaimer: This document is for educational purposes only. Trading involves risk. Always use proper risk management.