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2004issue C081-3

Constructing falsifiable reversal and continuation patterns

A named reversal-pattern or continuation-pattern is built from a time-ordered price chart, a locked prior trend, and a later break of support, resistance, or a neckline. Double tops, double bottoms, and head-and-shoulders stay unnamed until that interior line gives way; a triangle-pattern stays in the continuation class without a specified geometry.

  • Lock the prior direction first with a two-point trendline on a price chart that still shows enough structural detail.
  • A double top or double bottom needs comparable extremes, a preferred wait between swings, and a break of the intervening valley or middle peak.
  • A head-and-shoulders structure is bounded by a neckline and is not treated as reversed until that neckline breaks, with volume-confirmation compared across the swings.
  • A triangle-pattern is a continuation-pattern for a trend that remains strong after a pause; this construction does not specify triangle geometry.
Entries in this reading3 entries
Current trackTriangle pattern55 readingsHead and shoulders64 readingsDouble top and bottom68 readings

Start from the chart

A price chart is a time-ordered plot of prices over a chosen span. Less compressed series can display more structural detail for pattern construction. That detail is what later lets comparable peaks, troughs, and intervening lines be checked rather than assumed.

Lock the prior trend

A trendline is a straight line through two or more price points. It is used both to name the current direction and to project a later support or resistance path, and it may be extended forward as provisional support or resistance.

An up trendline joins successively higher lows and is treated as intact while price holds above it. A down trendline joins successively lower highs and is treated as intact while price holds below it.

Name floors, ceilings, and pattern classes

Support is constructed as a demand floor, usually below or near the current price, where buying is expected to slow or stop a decline. Resistance is constructed as a supply ceiling that buying may fail to clear.

Named chart structures are grouped as reversal-patterns, which mark a possible change of trend, or continuation-patterns, which mark a trend that remains in force after a pause.

Construct the double top and double bottom

A double top is constructed after an extended advance from two peaks of roughly equal height. The reversal is not treated as ensured until the lowest point between those peaks breaks. A peak separation of at least one month is preferred.

A double bottom is constructed after an extended decline from two comparable lows around a middle peak. Confirmation waits for a break of that peak. Bottoms are described as usually taking longer than tops, and a gap of at least four weeks between lows is preferred.

Double-top-bottom structures share one construction logic: comparable extremes, a minimum wait between swings, and a break of the intervening support or resistance. Editorial reading: that preferred wait is the second gate, so the swings can still be audited later.

Construct the head-and-shoulders

A head-and-shoulders top is constructed from three successive peaks with the middle peak highest. The neckline is drawn through the intervening lows. The right-shoulder decline is expected to cut that neckline.

Volume-confirmation compares activity across the swings. Volume is stronger on the left shoulder than on the head, then rises again on the final decline.

A head-and-shoulders bottom is constructed after a decline from three troughs with the middle trough deepest, often V-shaped. The neckline is taken from the start and end of that middle dip. The structure is not treated as reversed until price breaks that neckline, preferably with strong volume.

Keep the triangle in the continuation class

A continuation-pattern marks a trend that remains in force after a pause. A triangle-pattern is kept in that class to identify a trend that remains strong after a pause. This construction does not specify triangle geometry.

Withhold the name until the break

Editorial reading: the pattern name is the last construction step, not the first. Until the interior floor, ceiling, or neckline breaks, the chart still shows only candidate swings inside a locked prior trend.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
18 of 33 in the Triangle pattern track
20041-4 pp.Next on Triangle patternConstruct a corrective rising wedge before treating it as a shortA rising wedge is two converging trendlines of unequal slope, with the lower line rising more steeply than the upper, so successive higher highs do not keep pace with successive higher lows.
All readings on this track · 33 readings
  1. 1986Gold as a double zigzag before a contracting B-wave triangle
  2. 1990Scoring competing wave counts after a crash
  3. 1992Pre-trade checklist for trendline and triangle signals
  4. 1995Chart patterns as tactics, not strategy
  5. 1996Constructing Elliott wave counts with triangles and Fibonacci
  6. 1996A price-channel case study with a pending triangle signal and a planned stop-loss
  7. 1996Expanding triangle as a dual-label fourth-wave reversal worksheet
  8. 1997Rising wedge construction, breakout, and volume
  9. 1997Confirm structure and conditions before naming a Triangle pattern
  10. 1999Drawing the Triangle pattern before Breakout confirmation and the Stop-loss order
  11. 2000Four-phase market cycle triangle breakouts
  12. 2000Continuation triangles as a three-lock experiment
  13. 2001Folding rule: stacking three trendlines on an accelerating swing
  14. 2003A scored symmetrical triangle on a utility stock
  15. 2003Constructing wedges versus flat-boundary triangles
  16. 2004Testing triangle breakouts against volume filters
  17. 2004Mute triangles, histogram force, and trader optimization
  18. 2004Constructing falsifiable reversal and continuation patterns
  19. 2004Construct a corrective rising wedge before treating it as a short
  20. 2004A continuation triangle with Fibonacci targets and an apex stop
  21. 2005Pre-breakout filters for classic chart patterns
  22. 2005Reverse trendlines as a geometry lab for convergence and expanding triangles
  23. 2005Volume shapes versus triangle and double-pattern breakouts
  24. 2005A nested-pattern checklist on the 2005 euro
  25. 2005Volume test for a descending triangle breakout
  26. 2010Constructing triangle, broadening, and head and shoulders patterns
  27. 2011Treat a numeric pattern rank as a shortlist
  28. 2011Evaluating the head-and-shoulders as a falsifiable reversal
  29. 2013Auditing chart patterns by the first post-breakout swing
  30. 2014A three-gate entry for a triangle pullback
  31. 2014Golden triangle: a 50-day pause that still needs both gates
  32. 2014The triangle qualifier came after the rating pre-screen and the fifty-day bounce
  33. 2018Aligning daily, weekly, and monthly triangles with trendlines and Fibonacci retracements
By fieldChart patterns222 readingsBy year2004107 readings
All 55 readings tagged Triangle pattern
Also on Triangle pattern5 readings
2005Pre-breakout filters for classic chart patterns2013Auditing chart patterns by the first post-breakout swing2002Withhold the hypothesis until the second average confirms: a 2001 case2002The second pattern after a breakout2003A scored symmetrical triangle on a utility stock