Chart Patterns Explained: Flags, Head & Shoulders, Wedges, and Double Bottoms

Chart patterns are the vocabulary of technical analysis. They are recurring shapes that price carves out as buyers and sellers fight for control, and because human behavior repeats, the shapes repeat too. This guide covers the four patterns every beginner meets first — the bull flag, the head and shoulders, the wedge, and the double bottom — with the anatomy, the confirmation rules, the measured targets, and the part most articles skip: exactly how each pattern fails.

One framing before we start. A pattern is not a prediction. It is a description of what has happened, plus a statistical lean about what often happens next. The lean is real but modest, and it only becomes useful when paired with confirmation rules and pre-defined invalidation. Traders who treat patterns as guarantees fund the traders who treat them as probabilities.

The bull flag

Anatomy

A bull flag has two parts. First comes the pole: a sharp, impulsive rally of full-bodied candles with decisive closes. Then comes the flag: a quiet consolidation that drifts sideways or slightly downward, retracing only a fraction of the pole. The psychology is straightforward — after a strong advance, early buyers take some profit, late buyers wait for a dip, and the market digests. If the digestion stays shallow and orderly, the imbalance that produced the pole is usually still present.

Confirmation

The flag is confirmed when a candle closes above the flag's upper boundary. A wick poking above does not count; wicks are tests, closes are commitments. This single rule filters out the majority of failed flag entries.

Measured target

The textbook target projects the height of the pole upward from the breakout point. If the pole ran from 40 to 64 (24 points) and the flag broke out at 60, the measured objective sits near 84. Treat this as a reasonability check, not a destination — strong flags overshoot it and weak ones never get close.